British banks are getting ready for a eurozone break-up in the latest sign that a single currency split may be on the table. The risk management plan put forward by a UK regulator came as the euro hit a seven-week low on Friday.
Professor David Myddelton, chairman of the Institute of Economic Affairs in London, believes that eurozone leaders have been unable to learn from their own mistakes, failing to see that the single currency is inefficient and will inevitably break up.
“The euro is in such bad trouble. It’s obviously not going to continue as it is. Personally, I think the whole thing will break up. It’s proved to be unworkable,” he told RT. “One of the lessons is that people who are running the eurozone haven’t been able to look ahead.”
The main reason for pessimism about the future of the eurozone, David Myddelton explained, is that several countries in this union are “insolvent”.
“Unless they can miraculously improve their competitiveness, they need to default. Now that is not welcome news, and people are trying not to talk about it,” he said.
Professor Myddelton added that, despite all the reasons for splitting the currency between the weaker countries like Spain and Portugal on the one hand, and the stronger ones on the other – mainly the northern European states – there is one big political obstacle, and this obstacle is France.
“That is quite a nice solution that’s been touted around [but] there’s a big political difficulty, it seems to me, which is in which group would France go?” he said. “I think France really, economically, belongs with the weaker countries, but politically, to separate France from Germany would be extremely tricky.”
David Myddelton has been at pains to stress that the eurozone is a political project, and politics are to be blamed for its troubles.
“This whole thing is a political project, and it’s their [the eurozone leaders’] political will that has got us into the mess in the first place,” he concluded.