Despite all the fear-mongering about lost exports from a failed Euro killing off UK industry a recent report says that a Eurozone break-up would be far less costly to the UK than attempting to help it stay together.
Whereas successfully supporting the euro would sentence the UK to ten full years of austerity, allowing it to fail would mean a sharp shock of a couple of years but that this would be followed by more stability in the medium and long terms says the Centre for Economics and Business Research (CEBR).
The CEBR does say though that political sensitivities about being seen as the first country to break away from the Euro will tend to keep it together for now but that “It seems unlikely it will survive very long because of the political unpopularity of taking austerity measures seemingly to please foreign leaders and rescue foreign bankers.” Said a spokesman.
The ongoing debt crisis has forced the Eurozone to stare into the abyss of a possible break up especially as no progress has really been made on the Greek debt position, which would cost the zone 2% in growth and ongoing austerity for the UK.
But a Greek default would have less of an effect on the UK as the British banks are less exposed to Greek debt. And even further defaults by Italy and Portugal followed the UK would still soon be better off.
The chief executive of the CEBR, Douglas McWilliams said “If the eurozone is to be preserved, one of the costs will be 10 years of austerity. If it breaks up, the immediate pain is much more intense but we would expect that within about 30 months growth will actually be faster than if the eurozone survives. After five years we would expect the UK to be as well off if the euro breaks up as it would be holding it together.”
He also said that “…we do not think that a break-up would be anything like the disaster that has been argued."