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Eurozone ‘has ten days to save itself, or collapse’ – analyst

Wolfgang Münchau, associate editor of the Financial Times, believes catastrophe is coming if a deal is not struck by December 9.

Image: Yves Logghe/AP/Press Association Images

THE EUROZONE HAS just ten days to resolve its diplomatic impasse and take decisive action against the debt crisis – or it faces a “violent collapse”, an analyst has warned.

Wolfgang Münchau, an economic journalist and associate editor of the Financial Times, believes that if EU leaders do not reach consensus on a series of key decisions at a meeting scheduled for December 9 then the eurozone project could disintegrate entirely.

In an opinion piece for the Financial Times, he calls for immediate action on a number of areas – agreement on which has eluded EU politicians for several months. Münchau states:

  • The EU’s sovereign bond market has “ceased to function” after the failure of a German auction last week – and the area now faces a ‘run’ whereby global investors withdraw their assets.
  • The area’s main rescue strategy, the European Financial Stability Fund, is itself under threat as so many of the countries which fund it are seeing their creditworthiness questioned.
  • Politicians’ outspoken comments on rescue measures – such as Angela Merkel’s vocal opposition to eurobonds – is jeopardising any chance of a deal.
  • Time is running short. “If the European summit could reach a deal on December 9, its next scheduled meeting, the eurozone will survive,” he writes. “If not, it risks a violent collapse.”

He calls for dramatic financial interventions, the establishment of a eurobond, and agreement on a genuine fiscal union with a central EU treasury setting some economic policies.

For more details, read Münchau’s column in the Financial Times here>

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Michael Freeman

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