Euro Breakup – an aide-mémoire

Although the Eurozone coming apart is widely-discussed, understanding the scale is not something I find easy. So here is a first stab at an aide-mémoire, based on the nations' GDPs in 2010, and accepting that the problem is about debts which, in some cases, exceed GDP.

EU GDPs 2010, Millions of euros

The exploding Pie Chart (appropriate for once) divides the total GDP of the 27 EU countries (12,268,996 million euros) into seven elements, corresponding to:

• The UK*
• Nine other countries (BG, CZ, DK, HU, LV, LT, PL, RO, SE) which are not part of the Eurozone ('Rest non-euro')
• ThePIGS, the most problematic economies within the Eurozone (PT, IE, EL, ES)
• The EuroDeutschmark ('EuroDM') is a lumping together of DE (66%) and four economies (AT, BE, LU and NL) (34%) which are closely linked to it.
• The six other members of the Eurozone (CY, ES, FI, MT, SK, SI) ('Rest euro')
• FR
• IT

The Column Chart below presents the GDPs for these seven elements and also the PIIGS (PIGS and IT).

One question which arises is whether, assuming the PIIGS were to leave the Eurozone, the EuroDM would be worth constructing without FR.

*The two-letter country abbreviations are in the table below.

ADDENDUM 23 SEPTEMBER

I first touched on France returning to the franc in a post back in August, and the issue was implicit in what I wrote above. It may be significant that yesterday the French Prime Minister, François Fillon, announced the decision that France should adopt the same age for retirement as Germany, 67, by 2030. This would be the first of various steps towards social convergence:

une convergence progressive de l'organisation économique et sociale de nos deux pays, car c'est la clef de la survie et du développement de la zone euro et du continent européen
a gradual convergence of economic and social organization in both countries because it is the key to survival and development of the euro area and the European continent

The Left have criticised Fillon’s proposal, as they did the earlier rise in the retirement age from 60 to 62.
My opinion, for what it’s worth, is that the “cosy elite”, who run France, currently intend being part of the ‘EuroDM’ above.