Osborne must brace for euro road crash
It won’t happen at tomorrow’s meeting in Paris between Angela Merkel and Nicolas Sarkozy, where saving the euro will again focus on peripheral issues such as the need to underpin already agreed measures with governance and structural reform.
By Jeremy Warner
15 Aug 2011
But at some stage quite soon, European leaders are going to have to make up their minds; are they really prepared to do whatever it takes to save the euro, or might it not be better to make preparations for as orderly a break up and reconstitution of Europe’s currency arrangements as remains possible, given that already deep financial integration in the eurozone is going to make almost any restructuring unimaginably traumatic?
As is now widely recognised – though apparently not yet by European leaders – saving the single currency in its current guise requires the eurozone to become a joint liability union.
Only then will the still growing problem of external indebtedness among deficit nations resolve itself.
Yet agreeing such an arrangement is proving politically impossible for Germany and other surplus nations, who understandably find the idea of a transfer union with nations whose budgetary affairs they don’t control anathema.
As Wolfgang Schäuble, the German finance minister, has with characteristic bluntness put it: “I rule out eurobonds for as long as member states conduct their own financial policies”.