Eurozone is doomed even with German and French battle to safeguard its future
THE eurozone is on the verge of break up despite France and Germany’s battle to keep it intact, according to one of the world’s biggest investment banks. He said the stance
changed during the global financial crisis but added “divergence seems to be the norm since the eurozone was formed.”Mr Vamvakidis said it was a “red flag for the sustainability of the eurozone” and warned poorer countries could quit the bloc due to mounting
debt.He said: “Wouldn’t such countries want to have their own monetary policy at some point? “Wouldn’t populism find the common currency to be an easy target – which is already happening in some countries?”He added: “Without growth, debt could prove
unsustainable in some countries and populism against the eurozone could find support in some cases, leading to exit of a country left behind.“The probability that a country, at the core or the periphery, may decide to leave under a populist leadership at some point in the future is not low, in our view.” Pro-Europe French President Emmanuel Macron has come up with shake-up plans in a bid to safeguard the single currency, including a new common budget.But Germany has reservations about the move as it would have to cover the cost of a major amount of the spending.Mr Vamvakidis warned the situation could spark the departure of a wealthy country as transferring wealth to poorer countries may not be “politically feasible.” He said “even in an ideal scenario” in which the reforms were rolled out added the “eurozone could still be at risk if the lack of convergence continues.”Former Bank of England governor Lord Mervyn King echoed the view and previously said the “one-size-fits-all currency” was doomed.