Would a breaking up of the euro invite another Great Depression? Gideon Rachman of the Financial Times explores the answers.
This should be a great time to be a eurosceptic. The sceptics predicted the single currency would not work. They would love to gloat. Instead, they face a dilemma. For now the sceptics are being told that they must do everything possible to keep the euro together – or risk economic Armageddon.
This conundrum has provoked much head-scratching in Downing Street. Both David Cameron and George Osborne thought the euro was a bad idea – and neither man is surprised to see it in trouble. Instinct and intellect lead the British prime minister and his chancellor to believe that the single currency could well fall apart. If that is the case, then it would seem futile and counterproductive to pour money and energy into trying to prop up a doomed project.
Yet all the briefings Mr Cameron and Mr Osborne are getting from the UK Treasury suggest that a break-up of the single currency could provoke an economic cataclysm – with banks and businesses collapsing across Europe, and the risk of another Great Depression.