By Max Clarke
Southern European economies will grow by less than 1.5% a year until 2015, as export growth stunted by the strong Euro coupled with austerity measures hamper economies across the region.
The result of this, a new report published today by prominent economic think-tank, Cebr (centre for economic and business research) warns, will be the likely break-up of the Eurozone within 5 years, and possible as early as 2013.
“Sooner or later both the Greek population and international creditors will tire of fighting a loosing battle,” explained senior Cebr economist, Tim Ohlenburg, “leading to a break-up of the currency union as Greece pulls out, probably followed by other countries,”
Douglas McWilliams, chief executive of Cebr added. “A series of bail-out packages and eventual debt restructuring will delay this moment, but it will come. “Mathematically, our forecasts suggest that Ireland could stay in any revised Eurozone but the country may be hit by financial market contagion and the Government will have to consider how hard to fight a difficult battle.
”The eventual breaking up of the Euro is likely to damage the solvency of various European banks, especially in France. The danger of knock-on effects means that a bailout like that which followed the Lehmans collapse will be required, though the extent of it will depend on how quickly the authorities manage the process.”
Join us on