Tuesday, 3 January 2012

CREAKING EUROZONE TO BEGIN BREAK-UP THIS YEAR

The gloomy forecast came in a start-of-the-year survey from the think-tank

THE crisis-ridden euro zone is likely to begin breaking up this year, a leading economic forecaster has predicted.

The Centre for Economics and Business Research yesterday warned that there is a 60 per cent likelihood of at least one country leaving the single currency system in 2012.

Greece will almost certainly be first to give up the euro, with Italy expected to be close behind.

The eurozone as a whole is almost certain to disintegrate entirely over the next decade, the centre added.

The gloomy forecast came in a start-of-the-year survey from the think-tank.

It is likely to be taken very seriously in Westminster and Brussels, since the CEBR accurately predicted last year’s eurozone debt crisis.

In the latest forecast, chief executive Douglas McWilliams said: “It looks as though 2012 will be the year when the euro starts to break up.

“It is not a done deal yet – we are only forecasting a 60 per cent probability – but our forecast is that by the end of the year at least one country, and probably more, will leave.

“We have revised up our forecast of the probability of an eventual break-up within the next decade from an 80 per cent chance to a 99 per cent chance.”

Mr McWilliams added: “It’s become clearer in the last year of the virtual political impossibility of doing the deal that would be necessary to make the euro survive.

“To make the euro survive in the longer term, it needs countries to be sufficiently competitive to have some economic growth to be able to pay off their debts.”

Officials at the Treasury and the Bank of England are understood to be working on plans to deal with the break-up, which many experts fear will start a global economic crisis.

In further gloomy news, the centre also forecast that the British economy will return to recession this year.

Its report said: “Depending on how the euro is managed, European gross domestic products will decline by between 0.6 and two per cent.

“The UK will also probably hit a temporary recession – this could well be happening right now.”

The forecast came as support continued to increase for the Daily Express’s Get Britain Out Of Europe crusade.

The CEBR forecast that the financial squeeze on middle-income families looked almost certain to continue.

“It is going to be another tough year for UK households,” its report said.

“Whereas the squeeze in 2011 came from increased costs – as a result of commodity price hikes and the VAT rise – the squeeze in 2012 is likely to come from reduced income growth

To be competitive we need to be free of the EU straightjacket that is stifling our business. The eurozone is a 'soviet bloc' of differing economies all trying to trade on the same terms and under the same conditions, it just can't work, but the crooks in charge will push on because it's their golden goose.

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