Brit shock horror: euro to survive
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.
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.