The experts agree the euro's had it
Leading economists and politicians issue a stark warning over the eurozone that it cannot survive in its current form.
The experts were asked for their short-term and long-term predictions for the future of the euro. While most believe the eurozone may well survive the current Greek debt crisis – especially given the political will invested in preventing a disorderly default – none is confident that the contagion could be contained, and most believe the new European Fiscal Compact agreed in principle on Monday is unsustainable as it would take key financial powers from national governments – and their electorates.
Many of the politicians and economists criticized the rush to austerity being imposed on Greece and Italy, suggesting it would be counter-productive by depressing growth, and said the competitive imbalances between eurozone members would be impossible to overcome. They suggested the ultimate consequence of the crisis would be a much smaller eurozone with Germany at the centre and countries such as Greece, Portugal, Italy and Ireland on the outside.
Danny Blanchflower, Professor of Economics, Dartmouth College
“The fundamental problem that has not been addressed is that there is no growth plan for Greece. Even if you give them a new loan they have no means of paying it back.
Nouriel Roubini, Professor of Economics, New York University
“The euro zone is a slow-motion train wreck.
Gerard Lyons, chief economist Standard Chartered Bank
“The euro cannot survive in its current format. That either means a collapse is inevitable or there needs to be rapid moves to political union.
Vicky Pryce, economist and former head of Government Economic Service
"In my view in the short term there is the political will to get over the current Greek crisis and the amount of money that the ECB has made available to European banks is helping to avoid another credit crisis.
"But the question is what happens later. What people have not realised is that the underlying debt levels of Greece, Italy, Portugal, Spain and Ireland are still too high to be sustainable. This means the pressure won’t go away and that will be the make or break of the euro project.
George Soros, currency trader whose was dubbed “the man who broke the Bank of England“ for his role in speculating over Britain’s exit for the Exchange Rate Mechanism.
"We remain in the acute phase of the crisis; the prospect of a meltdown of the global financial system has not been removed. The trouble is that the cuts in government expenditures that Germany wants to impose on other countries will push Europe into a deflationary debt trap. Reducing budget deficits will put both wages and profits under downward pressure, the economies will contract, and tax revenues will fall. So the debt burden, which is a ratio of the accumulated debt to the GDP, will actually rise, requiring further budget cuts, setting in motion a vicious circle.
Alistair Darling, Chancellor of the Exchequer 2007-2010
"I don’t think anyone can realistically say that the eurozone will survive with its present membership and the longer the inaction goes on the greater the chance that one or more countries will be forced out.
Lord Lamont, Chancellor of the Exchequer 1990-1993
"I have a fairly clear view, probably wrong, that in the long run the eurozone will not work. It is not fit for purpose and was possibly the biggest policy mistake since 1945.
Nigel Lawson, Chancellor of the Exchequer 1983-89
"The eurozone is fundamentally flawed and can’t work. This is something that is now clear. But it is something that once you are in it is very hard to get out of.
Jim O’Neil, Chairman of Goldman Sachs Asset Management. Formerly head of global economic research at the bank.
"The reality is that too many countries joined the euro in the first place and ultimately without dramatic change they can’t probably survive.
Lord Ashdown, leader of the Liberal Democrats 1988-1999
"I don’t think that the eurozone in its present form can survive.
David Laws, Chief Secretary to the Treasury 2010 and former vice president of JP Morgan
"The key over the next few months is the extent to which the eurozone and the ECB can bolster confidence so that the problems that there are in Greece and Portugal don’t spread to Italy and Spain – two countries where the size of the debt and the refinancing and interconnectedness within the European banking system are such that if you end up with a breakdown in confidence it is going to be very difficult to repair.
"Far from being over, I fear the eurozone crisis is this year entering a more chronic, drawn out but equally dangerous phase.
Neil Kinnock, European Commissioner 1995-2004
"The eurozone is not going to collapse and I don’t think there will be any departures this year or probably at all.
Olli Rehn, Vice President of the European Commission responsible for the euro
"The euro is here to stay and will emerge stronger from the current crisis.
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