The eurozone is headed towards a ‘mega crisis’ and a straightforward break-up is now the best possible outcome for the monetary union, according to Roger Bootle, founder of economic research consultancy Capital Economics reports citywire.
Although many commentators believe the eurozone’s troubles reached their peak last November, Bootle warns that the storm has still to hit, and that the UK will not avoid the implosion.
While spotting the triggers of the next – and worst – phase of Europe’s crisis may be difficult, Bootle said it is clear something is ‘very wrong’. ‘The break-up of the eurozone is actually the bullish case, the crisis has not yet hit its peak,’ he told Citywire at a conference.
‘If I was standing here in 1914 I might well have said that a war between the UK and Germany was inevitable, but what I might not have been able to predict was what exactly was going to happen in Sarajevo a few months down the line.
‘I think this is an appropriate analogy, because if you think about what might happen, you might not be able to predict the exact events but you still get a sense that something is not right.’
Bootle, who made his name as an economist by predicting the 1990s inflation spike and the dotcom bubble, is by his own admission a long-standing eurosceptic, and he believes that the region’s problems began at the eurozone’s inception in 1999.
But Bootle also believes that Britain, now back in recession, needs a stronger Europe in order to secure its own recovery.
With around half of the UK’s exports shipped to the Continent, he points out that the country cannot withstand dwindling demand.