NYTIMES & BLOOMBERG Compilation/ UPDATE/
Estonia's severe budget cuts, about 9% of GDP last year, brought its deficit to 2.4% of economic output meaning that it outperforms all existing euro members, making it a “model” for the bloc and eligible to adopt the euro by 1 January. Estonia’s euro membership may bring with new investments from the Nordic countries like Finland. Economist Katinka Barysch feels that "letting Estonia in was “a nice symbolic move,” though it doesn’t change the fact that the most powerful policy makers inside the currency bloc are wary of enlargement. “Neither Germany nor the European Central Bank are at all keen on eurozone enlargement at the moment. Because Estonia is so tiny, it doesn’t really matter for euro zone stability overall - it’s not Poland knocking at the door,” Barysch said. But the central bank has a more negative assessment of Estonia. While Estonia is well within the limits on government spending and debt, it has a history of high inflation that raises concerns, the central bank said in a blunt report.
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