The euro will survive

Greece's surprise referendum on the bitter pill that is more austerity has thrown the eurozone into a panic. But contrary to what the doom-mongers say, the euro will pull through, says Merryn Somerset Webb.

Angela Merkel isn't too impressed with Greece. According to the FT, she reacted to the news that its prime minister, George Papandreou, is to call a referendum on Europe's new bail-out deal with "barely disguised anger". But I suspect much of the world now has a sneaking respect for Papandreou. His plan for the people to have their say on the new bail-out plan may well be more an attempt to save his own political skin than anything else. But nonetheless he has introduced an element of democracy into the European equation where there has long been none. He also seems to be almost alone in understanding that accepting the deal without doing something to gain a political mandate for it is to guarantee its failure.

Economists may think things will be fine if the Greek population simply accepts significantly lower wages and higher taxes. But even if they're right in theory (and they probably are), how do they expect it to happen? As Russell Napier of CLSA points out, anyone who suggests cutting wages fast in a democracy, without the assistance of inflation, has clearly never tried it. "It is a political impossibility." You might just be able to do it if you got the whole country on side hence the absolute need for the referendum but not otherwise.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.