The Future of the Eurozone:
How the Eurozone could end – and the opportunities for business
The Futures Company, 2012
Three years ago, the then President of the European Central Bank, Jean-Claude Trichet, gave a lecture to the European Parliament celebrating the first decade of the Euro. The single currency, he argued, “protects incomes and savings and helps bring down borrowing costs, thus promoting investment, job creation and prosperity over the medium and long term.” It had, he said, created greater “dynamism within the European economy.” That was in 2009. From the perspective of February 2012, it looks very different.
After the eruption of the Greek debt crisis in 2010, 2011 turned into the year of the crisis summit, with European leaders locked in an endless series of late night meetings in Brussels working on plans to save the Euro. Far from being a force for stability, the euro had (by general agreement) become an agent of instability. Far from lowering borrowing costs, it had driven them up in countries such as Greece and Portugal as well as Italy and Spain. And far from encouraging greater dynamism, in 2012 the debt crisis looked as if it was threatening a fresh recession.
Clearly something had gone badly wrong. Whether the euro survives or not, something needs to change. No currency system can stagger along in perpetual crisis.
This report won’t attempt to review the entire euro crisis in every detail. Nor will it attempt to predict precisely how the latest rescue plans will work out. Instead it aims to give a simple, clear and easy-to- understand account of the structural flaws in the single currency. And it attempts to lift people’s sights, to look at how the crisis in the eurozone will reshape the European economy.
By 2020, the eurozone crisis will have resolved itself. Either the currency will have stabilized, or some peripheral members will have peeled away, or, just possibly, it will have split up completely.
But whatever the eventual outcome, the European economy will look very different—for consumers, workers, governments and companies. Some of the changes could be dramatic.
To read the full report, download The Future of the Eurozone
(pdf, 2.8 Mb).