Wednesday, 9 November 2011

The UKs Big Fat EUropean ... Divorce





Eurozone break-up would be no disaster for UK
What Investment
Breaking up the Eurozone would be less disastrous for the UK than predicted, a new report has suggested.
Breaking up the Eurozone would be less disastrous for the UK than predicted, a new report has suggested.
In its assessment of the cost of a euro break-up, the Centre for Economics and Business Research (CEBR) said the UK would
experience a 0.5 per cent reduction in gross domestic product (GDP), based on GDP in the Eurozone contracting 2 per cent as a
whole.
Douglas McWilliams, chief executive of the CEBR, said that slower growth in export markets would impact UK growth and that
business investment would also be affected by a break-up.
The report comes as Greek Prime Minister George Papandreou agreed to stand down, leaving the countryʼs leaders to form a
unity government that will be led by a new prime minister.
The CEBR said the ʻon-offʼ Greek referendum had forced Europe to ʻlook over the edge and confront the issue of the break-up of
the Eurozoneʼ.
McWilliams explained that as the UK holds just £2.1 billion of Greek sovereign debt, compared with £14.1 billion and £9.3 billion
in Germany and France respectively, the monetary impacts of Greece leaving the Euro and defaulting would be ʻmanageableʼ.
He added, ʻIf it breaks up, the immediate pain is much more intense but then there is a more stable basis and we would expect
that within about 30 months growth will actually be faster than if the Eurozone survives in its current form.
ʻAfter five years we would expect the UK to be at least as well off if the euro breaks up as it would be under the alternative11/9/11 UK to benefit if Eurozone breaks up, says report | What Investment
www.whatinvestment.co.uk/print/1666858/eurozone-breakup-would-be-no-disaster-for-uk.thtml 2/2
scenario of holding it together.ʼ

However, Ruth Lea, economic adviser to the Arbuthnot Banking Group has warned that the UK will struggle to avoid a doubledip recession in light of recent developments in the Eurozone.
She said, ʻBritainʼs economy is faltering and will suffer from the rapidly deteriorating ec



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