Euro Crisis: Round 2

The papers today and tomorrow will be full of the story of the IMF reporting that Europe needs to follow the UK's lead on austerity and how wrong that have been to criticise the Government in the past.

However, they are all missing or will miss the two really key issues:

1) The UK has not undergone real austerity. The cuts in some areas have been made up by tax cuts and increases in other areas of spending such as Foreign Aid and the NHS. The IMF say the UK has obtained fiscal credibility - oddly, this is because the UK has engaged in a massive exercise in money printing. This could not have happened in the eurozone as the central bank will not do this.

2) Germany is rapidly falling towards recession, driven by a drop of exports to Russia and the continued downturn in its export markets around Europe and in China. With France and Italy not really out of recession, this means the Eurozone is heading back towards trouble. No growth and huge debts leave many of the Countries in the eurozone very exposed indeed.

2011 was not a pretty year, if 2015 repeats it then the UK is in for a tough time given our own debt dynamics.