Why collapse of the euro equals collapse of the EU

Thursday, September 15, 2011
By Paul Martin

By Andrew Lilico
Telegraph.co.uk

Many statements from senior eurozone policymakers treat the continuation of the euro and continuation of the European Union as much the same thing. Some of those commenting upon these events dispute that. They point out that the Single Market was there before the euro. They imagine that schemes in which Germany and few other countries form an “Eastern euro” whilst France leads a “Western euro” would be compatible with the continuation of the Single Market.
They are wrong. And it is actually the fact that eurozone breakup (by which I mean any arrangement in which any of France, Germany and Italy ceases to be in a currency union with the others – Greece’s quasi-inevitable exit from the euro would not be what I mean by “eurozone breakup”) would very probably lead to collapse of the EU that generates most of the costs of that catastophe scenario, rather than the costs of breaking up the euro itself. It is a grave mistake to imagine that just because the Single Market existed before the euro (and could surely have continued for some considerable time if the euro had never happened) it therefore follows that the Single Market could continue if the euro were to break up.

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