What happens if / when the eurozone collapses?

by | Nov 28, 2011


I was dismayed to read the Telegraph’s account of the Foreign Office’s forward planning for the collapse of the eurozone. Apparently, ministers are telling embassies to expect riots on the continent, and a flood of British citizens heading home for Blighty, in tubs and dinghies and pedalos. There was cheeriness from the FT’s Wolfgang Munchau as well, who wrote on Monday, in an upbeat piece called ‘The Eurozone only has days to avoid a collapse’:

If the European summit could reach a deal on December 9, its next scheduled meeting, the eurozone will survive. If not, it risks a violent collapse. Even then, there is still a risk of a long recession, possibly a depression.

The Guardian’s political blog tells me the Treasury is already ‘hard at work’ on a contingency plan:

They are losing sleep over fears of a run on the banks in Italy and some of the other troubled eurozone members. This is what one Treasury source told me: “The five to midnight scenario will be a run on the banks in Greece, Italy and Portugal. Spain is fine. There is already a drawdown from banks. But we haven’t got to a run on the banks yet.” [Why is this official so confident that ‘Spain is fine’?]

So what will happen if the unthinkable occurs and the eurozone does collapse? I’d like YOU, the well-informed Global Dashboard community, to tell me, so I can prepare in my London bunker.

Here are my rash predictions:

1) The further rise of far-right nationalist political parties and xenophobia towards immigrants. You’re already seeing this happen in Greece.

2) The Russian government exploits the power vacuum. I’m not saying Russian tanks will be rolling down the Champs Elysees anytime soon. But one of the main ‘points’ of Europe, it seemed to me, was to act as a collective bargaining bloc with Russia, and as a collective buffer against Russia’s imperialist ambitions. What happens when that buffer disintegrates? Keep an eye on the EU’s eastern border next year, particularly Ukraine, Belarus and Georgia.

Any other predictions?

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    Jules Evans is a freelance journalist and writer, who covers two main areas: philosophy and psychology (for publications including The Times, Psychologies, New Statesman and his website, Philosophy for Life), and emerging markets (for publications including The Spectator, Economist, Times, Euromoney and Financial News).


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