The threat of European Union politics and the politically expedient decisions made to force through the creation of the Euro-Zone are coming home to roost, the current problems were inevitable because the Euro was built on foundations of quicksand, 17 countries with two indemicably corrupt governments, 17 very different economies with 17 economic policies, intrinsically unstable coalition governments, fudged acceptance conditions and one interest rate!
If ever the saying ‘a disaster waiting to happen’ were true it is now, the politics of the European Union decreed that there had to be a Euro currency but it was set up purely as a political experiment without the financial underpinnings essential to a currencies survival, the strict entry requirements were fudged to allow in the weaker economies and a currency was created without the levers to maintain it, it survived in times of plenty when problems could be hidden but it can’t survive hard times without a full political and financial union – one government, one economic policy and one United States of Europe, without this the Euro-Zone is in cloud cuckoo land! Further reading
The dangers now are immense, the French trying to renegotiate the current deal on fiscal discipline could on its own send the markets tumbling, as Greece default, if not handles with extreme care could cause a domino effect taking Portugal, Spain and Italy with it and any rescue of the Banking sector in those countries, plus France which is has billions of loans to Greece, will make the Bank rescue in the UK look like chicken feed.4
The UK can’t be complacent because any collapse of the Euro-Zone will badly damage economies world-wide, not just the UK so we must be supporting them all we can whilst at the same time having a major push to increase exports outside of the European Union.
But, we should not be supporting the Euro-Zone financially any further than we have already, despite it being highlighted that European Union rules could force us to contribute a further