The euro disaster

The euro has been a failure. Britain is right to stay on the sidelines, says James Ferguson...

The euro may not yet be a sinking ship, but it's certainly taking on water. MEP Daniel Hannan used last weekend's Sunday Telegraph as a platform to call for UK withdrawal from the EU. In June, a member of Italian prime minister Silvio Berlusconi's cabinet labelled the euro "a disaster" and the European model a "failure". Then, last month, Berlusconi told a party rally that "Prodi's euro has screwed us all". Could it really be that Berlusconi is, in the words of Ross Clark in The Sunday Telegraph, "at least considering doing what until very recently would have been considered unthinkable: taking Italy out of the euro"?

This idea is not as preposterous as it may seem. An HSBC report recently argued that not only Italy, but Germany and Holland too would be better off out of the euro. More pertinently, the financial markets are already paying less for Italian government debt than German, implying that many think the possibility of being repaid in lira rather than euros is a real one.

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James Ferguson qualified with an MA (Hons) in economics from Edinburgh University in 1985. For the last 21 years he has had a high-powered career in institutional stock broking, specialising in equities, working for Nomura, Robert Fleming, SBC Warburg, Dresdner Kleinwort Wasserstein and Mitsubishi Securities.