New research that has been released today suggests that if the Eurozone broke up then Britain would be better off in the future. The results suggest that if the Eurozone were to break up in a disorderly fashion then this would bring a shock to the economies of Europe and might lead to a second recession.
However, once the initial shock had passed there would be a quicker return to economic growth than if the Euro were to break up over time. The researchers come out of the Centre for Economics and Business Research.
Currently, the governments of Europe are trying to keep the Eurozone in one piece and recently the political leaders in Greece have announced that their prime minister will be resigning after pressure from the rest of Europe.
David Cameron however has warned that breaking up the Euro would be even more damaging than if it were left in place. He hopes that the leaders of the Eurozone will be able to resolve their problems without abandoning the currency.
Economists from the CEBR have said, “The breakup of the Euro would not be as disastrous as people seem to think it would, stronger economies would benefit from abandoning the Euro and they would become strong against the pound which would encourage British exports.
“If the Euro were to break up the immediate economic consequences would be quite severe but after that growth would be faster and the recovery would be more pronounced. Five years on, Britain would certainly be in a stronger position than they would be if the Euro was saved.”
The view from CEBR is quite at odds with the opinion of most analysts in the City. They suggest that if the Euro were to collapse the economic damage across Europe would be catastrophic. Just recently the leaders of the EU have said that countries such as Greece might be forced out of the Euro as they are unable to pay off their debts.
Morgan Stanley’s chief economist has recently commented, “By the EU leaders saying this they have essentially opened a Pandora’s box, investors are likely now to leave Eurozone countries that are struggling and put their money into stronger economies. This could possibly trigger further crises and make everything even worse than it is now.”
Greece has recently been forced to act as there is a genuine threat of the nation becoming bankrupt. Recently an agreement was made between Papandreou, the Prime Minister, and the leader of the opposition party. They will be forming a coalition government as the Prime Minister is having to resign.
Another country that is becoming a concern for members of the Eurozone is Italy as its government, which is led by Berlusconi, is becoming increasingly fragile. Berlusconi faces a vote in the Italian parliament tomorrow which could mean he has to resign, however, the Italian leader has said that he does have the support that he needs to survive.
The Conservative party is putting increasing pressure on David Cameron and he will soon be having a meeting with those in his party who do not want to see the survival of the Euro, as his pro-euro position is causing trouble with the far right members of his party.
Mr Cameron has recently commented that he will make sure Britain remains in the European Union but he wants to see some control over employment and social laws taken back from Brussels. Last month over 80 Conservative MPs went against the Prime Minister during the rebellion in the House of Commons when they demanded that there be a referendum about the U.K.’s membership of the European Union.