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Leaving the euro: a practical guide

Friday, 6 July, 2012

The Economist and Daily Telegraph columnist Roger Bootle has won the £250,000 Wolfson Prize for Economics for devising the “smoothest” plan for a break-up of the eurozone. According to Bootle, the optimal solution would involve a northern monetary union centered on Germany, and including Austria, the Netherlands and Luxembourg, and maybe Finland and Belgium. Given that these countries are well aligned with Germany, economically, institutionally and culturally, it would be feasible for them to form a full fiscal and political union — if their electorates so desired. Which is a rather big if.

Wagner Because France cannot compete with Germany any longer, Bootle would advise Paris to to stay out of a northern monetary union and throw in its lot with the south. As the leader of a grouping of former euro members, France could then aspire to a form of mini-greatness in keeping with its chauvinistic tendencies. But, admits Bootle, pride would prevent the French elites from taking this sensible step and they’d prefer to suffer the pain of being tied to Germany than be associated with a softer euro of the the weaker eurozone member states.

The most probable scenario, says Bootle, is the departure of the weaker member states, and the the survival of the euro as the currency of the German-dominated northern core.

The only fault with Roger Bootle’s proposal is that it ignores the pragmatic and emotional thinking of Germany’s elites. A break up of the eurozone would be a catastrophe for them. The industrialist and managerial class know that a weak Euro is good for for Germany and its exports, and they want to keep it that way. The political class dream of a “united” Europe and see the euro as a means to that end.

It’s one big opera, this crisis, but we’ve seen it performed before. In the final scene, the Rhine overflows its banks and the Rhinemaidens jump in to claim the Ring. As they celebrate the return of its gold to the river, a red glow is seen in the sky. The interior of Valhalla is visible. Flames flare up in the Hall of the Gods and as they are consumed by fire, the curtain falls.


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