The country is following in the footsteps of its near neighbours. Estonia joined the monetary union exactly four years ago, whilst Latvia joined this time last year.
The Eurozone is in a crisis. The Economist points out that:
“Only Lithuania—which joined the euro zone on the first day of 2015—and Ireland are forecast to see strong growth next year.”
Additionally, the magazine mentions that there are worries that the monetary zone could fall into a deflationary period. The Eurozone’s inflation target is 2%, however, in October, the figure fell well below to 0.4%.
Speaking to CNBC, the Governor of the Bank of Lithuania, Vitas Vasiliauskas, said that despite fears about the Eurozone, it was the next ‘logical step’ for the country.
The EU suffered a shock last year when a number of Eurosceptic parties, including UKIP in Britain, managed to increase their number of seats in the European parliament. 2015 is likely to be a troubling year for the EU.
Lithuania is joining the Eurozone at a time when Greece’s Coalition of the Radical Left (Syriza) have a chance at winning Greece’s next election, which is taking place as the country failed to elect a new head of state.
Syriza does not advocate leaving the Eurozone, but a victory in Greece could worry those pushing the austerity agenda across the EU as the party advocates an alternative.
2015 could be a pivotal year for the Eurozone and the EU as a whole. Meanwhile, in the UK there could be the prospect of the an in/out referendum by 2017 - or earlier if UKIP get their way.
Lithuania joining the Eurozone is a sign that many still see benefits to the monetary union, however, the zone’s new member will not hide the fact that the EU is struggling - both politically and economically. Whether the EU can turn this around, however, is yet to be seen.
What will 2015 hold for the Eurozone and the EU?