Nigeljay

There is a lot of commentary in the press in the UK at present about the inevitability of the break up of the Eurozone as a result of the irresistable pressures in countries like Greece, Ireland, Portugal etc. Of course there is a degree of speculation in all such articles. However what do people think would be the consequences if Spain ultimately left the Euro.

I don't expect to see definitive answers but the opinions would be very interesting. What would be the effect on property values, cost of living, employment etc.?

Fred James

If the Eurozone broke up Spain would be back to the Peseta.

The exchange rate against the GBP would improve massively from the point of view of someone with a Sterling income.

If you live in Spain property prices would go down relative to the GBP but if you have no intention of returning to the UK that would be irrelevant.

Cost of living compared to wages might go up but again, if you are on a Sterling income the cost of living would go down.

Employment would suffer but for all the retired UK expats that would not be an issue.

Can't see it happening though. The ECB will bale out Greece whatever. They can't afford not to.

Of course there might be blood in the streets and all the foreigners might get kicked out - who knows.

teuchterpete

I would have thought that it all depends on Germany. They are the key. Historically they have always had a strong currency and I can't see this changing. As long as they stay in the Euro all the other Euro countries will be propped up by them. As for other countries leaving by themselves that is another thing. If Spain left and readopted the Peseta then presumably it would fall, but the pound is hardly steaming ahead is it? we are not thought of as being in much better state than the other struggling euro countries, or am I reading the situation wrong?
Pete

Fred James

If the Euro went away then some currencies, such as the DM and FF would be strong against Sterling but the rest would almost certainly be weak.

Sterling is holding its own with the Euro if you look at the rates of both against the USD.

The UK has its problems but nothing compared to the problems in the PIGS.

jackytoo

I agree Fred. A version of this has been all over the financial news today.

http://www.google.com/hostednews/afp...80a6c517c1.281

I think if the Euro collapsed it may not be good news for the UK either, hence the fall in the stock market over the Greek crisis.

agoreira

I said earlier that Greece only produces civil servants, but even so I was surprised to read that Greece produces a miserly 1.9% of Europe´s output. If that is causing so many problems, think what would happen if Spain went t1ts up! (I don´t think it will). Most agree it´s not about saving Greece, it´s about saving the euro. Apart from being highly illegal, I can´t see that continually baling out Greece is going to do any good, it seems incapable of getting it´s house in order. As someone said, they have been living like Germans, the problem is they don´t work like Germans.

Nigeljay

The point is that loaning more money to a country inundated by debt cannot be sustainable. A commonly held view is that Greece is doomed to leave the euro and that once this has happened a number of other countries will see advantage in taking this route. The continuing support with austerity measure strings is deeply unpopular with the Greek populace but is also unpopular with the voters in the countries providing the lions share of the support (e.g. Germany).

The consequences of a number of countries leaving the euro are complex to predict. As someone with financial and personal interests in Spain and the UK I am interested in trying to understand the potential ramifications. Even Germany and France are not immune to the potential fallout which could push countries back into recession.

bobd22

[QUOTE=agoreira;9447496Most agree it´s not about saving Greece, it´s about saving the euro.
Probably more about saving French and German interests especially banks who have a lot tied up in Greek debt hence the need to keep it going. Banks in the UK now trying to off load debt in Greek banks so will Germany and France when acceptable don't be surprised if they pull the plug. I doubt that the euro will go totally but I think there will be some changes you just cant have same interest rates etc for countries like Germany France as you do for the so called PIGS. How they will resolve it who knows. They used to say Soviet Union was too big to go but it did! EEC seems to be trying to replace it maybe it will go the journey as well. As others say Germany is the lead country there public are not happy at bailing out the likes of Greece but have little option. I wonder who will buy these state assets in Greece? if its Germany and France that to the Greek public would be like throwing petrol on the fire. As also has been mentioned we can't crow Euro in deep do do and £ cant get over 1.14!

HBG

It's a big topic regularly discussed, especially in the British eurosceptic press. The Euro's demise has been predicted since the Eurozone was formed.

I'm over-simplifying the discussion by a factor of thousands, but the Euro has risen by 60% against the Dollar, and 30% against the pound Sterling since its inception. It has continued to rise in value against those currencies over the past two years or so, despite the disasters within the Eurozone.

But this time the groundswell of opinion has spilled over on to the streets, there is blood on the streets, and all European voters are aware of it. We have the 'indignados' in Spain, peaceful so far, but that could change.

If fiscal and further political union is a necessity for the continued survival of the Eurozone, then I can't see the voters anywhere in Europe supporting it.

Unfortunately I can't see the pound Sterling coming out of the chaos that would follow the collapse of the Euro any stronger, our debts are too high and 60% of our exports go to the EU. I used to think that Spain returning to the Peseta would make us expats rich again, but fear that the opposite could happen.

agoreira

[QUOTE=bobd22;9447664][QUOTE=agoreira;9447496Most agree it´s not about saving Greece, it´s about saving the euro.
Probably more about saving French and German interests especially banks who have a lot tied up in Greek debt hence the need to keep it going. [/QUOTE]

Same thing, France and Germany are obviously the two big players in the euro, so they stand to suffer most. Already the Germans are muttering about why they should bail out Greece and have to work until 67, whilst the Greeks will be retiring at 63. It's accepted that if Spain were to go, there simply wouldn't be enough money left to bail them out. Then what?

bobd22

I agree that it is the same thing Germany and France want and run the eurozone many say that the euro is just really the DM and that was fine when things were all going well. However has as been said the tide appears to be changing somewhat and there has to be some change to what they have. The ECB does not appear to be resolving the problem just keeps paying out to keep them on board something has to give but what is the question. As bhg says the pound unlikely to come out of it all smelling of roses but at the moment that has a lot to do with our interest rates. I suppose like all things time will tell

Nigeljay

In reality the level of interest in Sterling by currency speculators is second order against the three largest currency blocs of the US Dollar, Yen and Euro. They also perceive the fate of the UK as inextricably linked to the health of the European economy. i don't see Sterling making much headway until the UK economy is seen to be at least as strong as Germany's and UK interest rates are more favourable. That could be a long time ahead or never. However if several countries default on the loans, the damage to French and German banking could hit the countries hard pushing them back into recession. Unfortunately the UK is likely to follow them. If Spain returns to its local currency it may start to pick up faster.

No doubt France and germany will continue to fight hard to keep everyone on board but this might not be a good thing in the end.

Who knows for certain? I certainly don't

Bigger Jim

http://www.spiegel.de/international/...769329,00.html

If you browse the International edition - in English - It might give you an insight into what the engine drivers think. They dont seem to like it either.

Jim

agoreira

I don't think anyone knows for certain, certainly not the "experts", they helped get us where we are. A weak pound is not all bad, it makes UK's exports cheaper and more attractive, and the fact that expats or holidaymakers get a few euros or dollars less for their euros is the least of UK's worries. France and Germany have much more exposure to Greece, nearly eight times what UK has, even Spain has twice that of UK, we are in about seventh place, so I guess would feel the pain less. Spain, Portugal and Ireland would be a different story, UK is heavily invested there.

agoreira

An interesting article there about how Germany was the worst debtor of the 20th century. What a difference 50-60 years make!
http://www.spiegel.de/international/...769703,00.html