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Will the euro survive financial difficulties in the euro zone?

There is no doubt that the ongoing financial difficulties in Spain, Portugal and Greece are impacting upon the reputation and investment profile of the euro. While there are suggestions that the short-term fall in the value of the euro, against the dollar in particular, could slow as "short" positions are closed many feel that the end of the fall is not yet in sight. So what can the European Union do to support the currency?

There is a growing feeling that the European Union expanded to quickly and brought in a number of countries with relatively weak economies. When you consider that many new entrants to the European Union have received literally millions upon millions of pounds of aid to improve their own economy, in many ways finance provided by European Union members has been spread too thinly across the board with little left in reserve for founding member states.

Without the worldwide financial crisis it is unlikely that we would have seen the same pressure on the euro because the funding put aside to help new member states would have been more than enough to see them through their period of change. However, there is no doubt that the ongoing financial crisis within Europe is stretching European Union funding to the limit and this is the first major test of the euro zone.

The truth is that the euro is here to stay and while the short-term situation could get worse before it gets better, the long-term prospects for Europe are still positive.

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