Euro prevented 'terrible crisis', Davos hears

27th January 2011, Comments 0 comments

Without the euro, Europe would have been plunged into a "terrible crisis", political and economic elites gathered in Davos heard Thursday, as the EU grapples with its ongoing debt problems.

Speaking at the World Economic Forum here, Maurice Levy, chief executive of French advertising giant Publicis, said: "I think the European system... has worked pretty well. It has proven to be resistant to this type of crisis."

"If you look back to what would have happened in Europe if we had not had the euro, if we had not had the EU and the co-ordination that happened recently, I think we would have been through a terrible crisis," he added.

"Greece would have gone bankrupt. They would not have been able to pay their debt, same for Ireland."

Heavily-indebted Greece was forced to seek help last year from the European Union to avoid a default that many feared would have sunk the common currency project.

Ireland was forced into a similar appeal for help late last year after the financial markets turned against it, preventing Dublin from raising fresh funds at sustainable interest rates.

But while several countries on the 17-country eurozone's edge have suffered, Eckhart Cordes, chief executive of German retail group Metro, said his country, Europe's top economy, had "significantly benefited from the euro."

"Had we not had the euro, we would have seen a significant appreciation of the German deutschmark, which has not happened," he said.

James Dimon, chairman and chief executive of US investment bank JP Morgan, said he believed the European Union was, in his view, "one of the greatest human endeavours of all time."

However, he acknowledged that disparities between eurozone countries made a coordinated resolution of the sovereign debt crisis difficult.

"There's a fundamental underlying problem and that is that this nation is retiring people at 55 with 100 percent pensions, generous social programmes and working 33 hours a week and this nation is working 40 hours a week and 65 retirement.

"One isn't going to pay for the other. It will be a matter of time until people say I'm not paying for their lifestyle."

© 2011 AFP

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