Brit shock horror: euro to survive

March 10, 2010

Euro brezinys_EC1

Britons have never really got the euro zone. “Its not really going to happen, is it?” was a typical question from a City analyst to Reuters back in the mid-90s. The political drive behind the creation of the monetary union was beyond many in eurosceptic Britain.

So the results of a straw poll at an event sponsored by independent City advisers Lombard Street Research were somewhat suprising.  A hundred or so mainly British investors were asked whether the euro would be around in five years with its current membership. Response was about 80 percent saying yes to 20 percent saying no.

The event involved a debate on Europe’s economy between Lombard St’s Charles Dumas and Bank of America Merrill Lynch’s Holger Schmieding.

Dumas and Schmieding — a Brit and a German — had very different views, loosely based around the stresses the euro zone is experiencing between its core and periphery.  Dumas is very bearish about the economy, seeing depression in the future.  Schmieding, on the other hand, reckons there are problems but economic recovery will continue.

As for the euro zone, Dumas reckons it cannot survive its imbalances over the long run unless some form of deeper political union is forthcoming, as France and Germany envisioned back in the 1990s.

Either it splits up, which to my mind is rational, or you get fusion. Fusion occurs through pain.

Schmieding , by contrast, sees no break up and argues that the actions now being forced upon Greece and others because of their deficits will in the end make the euro zone stronger and more flexible.

It was enough to persuade just a few people at the event  to change their vote — in favour of the euro surviving.


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see

The euro will definitely survive because it is not just a financial tool; it is more a political tool. A lot of pride and dignity are riding on the big “E” sign. Any cross-border disparities can be ironed out fiscally; if all else fails, call Goldman. In the final analysis, it’s the average Joe who picks up the tab collectively. The guys in charge still live their “champagne and caviar” lives. Got that?

Posted by doctorjay317 | Report as abusive

It may survive, but if it does it will continue to be the currency of a declining region. The media continues to give the impression that the U.S. is in worse financial shape, but look at the growth numbers. The U.S. continues to grow faster than the Eurozone almost every year. The euro is the wrong answer to the wrong question. I am sick and tired of politicians who want to create a superstate so that they can play big shot at international conferences. Small developed countries do a better job of looking after the interests of their citizens. No one say Canada can’t survive separately from the U.S. The EU is nothing more than a politicians’ fantasy, and a tremendously harmful one.

Posted by Osomec | Report as abusive

Totally agree with Osomec. The euro will survive, but the subtext of this article is this: should the UK join? The answer is a resounding “no”. The fact that you are far better off not joining a club whose existence is of considerable benefit to you, has never been a good reason for joining that club. Geddit? (And if I might add a subtext of my own, Greeks, geddit?)

Posted by Coruscation | Report as abusive