time to count cost of eurozone shrinkage
Last Updated : GMT 13:03:42
Arab Today, arab today
Arab Today, arab today

Time to count cost of eurozone shrinkage

Arab Today, arab today

Arab Today, arab today Time to count cost of eurozone shrinkage

Brussels - AFP

Economists, banks and even punters in bookmakers are studying more and more seriously scenarios involving the collapse of the eurozone. Maybe not its total evaporation, but certainly shrinkage with peripheral or weak countries falling off the currency's map -- and in all cases, according to the experts, with a heavy price to pay. Analysts agree that no country would emerge unscathed, at least in the short term. As for the long term? Well, few even dare to imagine the fall-out. In the view of London-based Capital Economics, even a limited re-drawing of the eurozone's borders, with the exit of the bailed-out trio of Greece, Ireland and Portugal over the next two years, would trigger a drop in eurozone gross domestic product (GDP) of 1.0 percent in 2012 and 2.5 percent in 2013. That would equate to the same sort of economic contraction endured between 2008 and 2009 following the financial crisis triggered by the collapse in the US home loan market. In a recent note to investors, UBS bank calculated that if a "weak" euro country like Greece gave up the currency it would cost every man, woman and child there some 10,000 euros (more than 13,000 dollars) each in the first year, and thousands more over the adjustment period. Even a "strong" country like Germany would see a loss of between 6,000 and 8,000 euros per head in year one -- between one quarter and one fifth of the country's annual economic output. A return to the drachma, the deutsche mark, the punt and the franc or any other national currency would mean devaluations for some, appreciation for others. According to Jens Nordvig of Japan's Nomura Securities, Germany's currency would rise against the dollar, but Greece would lose 60 percent of its money's value. Italy, Spain or Belgium would lose around a third each. While scope for exports would improve, debt restructuring on that basis would mean a dramatic rise in borrowing costs for those governments who write off the most. National banking systems would collapse, experts say, due to a loss of confidence in the value of the currency that replaced the euro. This isn't rocket science -- panicking over hard-earned savings, experience shows citizens pull out what they can and flee while companies would struggle to raise investment capital. If the economy stopped functioning normally, there would then be the threat of widespread social unrest. Germany, meanwhile, would lose export business -- due to a rising national currency and also the emergence of new, cheaper European competition. It would be no different in the event Italy or some other big eurozone economy left. Jacques Cailloux, a Paris-based economist with the Royal Bank of Scotland, told AFP that were France to exit the eurozone, Germany would suffer because "its banking system would be staring at exposure to French banking debt worth some 200 billion euros". US banks would be looking at 10 times that amount, Cailloux added ominously. Looking further down the line, Capital Economics believes prospects for ex-eurozone economies "may be improved by the ability of (these) former member states to set their own policy and allow their currencies to fluctuate." Wages would not have to drop under a devaluation, while suddenly a bottle of ouzo would not cost as much for others to import, for example. "It's hard to put a price on it, but clearly it would mean a huge cost, if not quite apocalyptic," Cailloux said of the price for even partial eurozone break-up. British banks and Asian-based multinational companies are already engaged in prudent contingency planning for the worst-case scenario. And as Cailloux says, the problem is "everyone is going to have to plan for this eventuality, that's the issue for 2012".  

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

time to count cost of eurozone shrinkage time to count cost of eurozone shrinkage

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

time to count cost of eurozone shrinkage time to count cost of eurozone shrinkage

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today The Big Apple bike boom

GMT 10:47 2017 Wednesday ,22 November

The Big Apple bike boom
Arab Today, arab today Keep kids busy at Thanksgiving gatherings

GMT 11:14 2017 Friday ,10 November

Keep kids busy at Thanksgiving gatherings
Arab Today, arab today Leaders of Russia, Iran, Turkey meet

GMT 10:12 2017 Wednesday ,22 November

Leaders of Russia, Iran, Turkey meet
Arab Today, arab today 'Advanced' cyber attack targets Saudi Arabia

GMT 10:18 2017 Wednesday ,22 November

'Advanced' cyber attack targets Saudi Arabia
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today May under Brexit pressure at EU reform summit

GMT 02:14 2017 Saturday ,18 November

May under Brexit pressure at EU reform summit
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Honda recalls 800,000 minivans

GMT 11:43 2017 Wednesday ,22 November

Honda recalls 800,000 minivans
Arab Today, arab today VW says will invest over 34bn euros

GMT 07:19 2017 Tuesday ,21 November

VW says will invest over 34bn euros
Arab Today, arab today Singer Jahda Wahba has unlimited ambitions

GMT 07:56 2017 Monday ,20 November

Singer Jahda Wahba has unlimited ambitions
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 09:23 2017 Saturday ,18 November

Fedra happy for “Between Two Worlds” success

GMT 11:15 2017 Thursday ,16 November

Angola oil boss sacked by father's protege

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 11:49 2017 Thursday ,17 August

Egyptian artist presents new collection of designs

GMT 13:41 2017 Tuesday ,21 November

French choke up over proposal

GMT 00:44 2017 Monday ,20 November

Japanese regulators raid Airbnb

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday