Euro zone unlikely to survive intact: Reuters poll
By Andy Bruce
LONDON (Reuters) - The euro zone is unlikely to survive its sovereign debt crisis in current form, according to a majority of leading economists and former policymakers polled by Reuters.
Fourteen out of 20 prominent academics, former policymakers and independent thinkers polled over the last 10 days agreed the euro zone's make-up would change.
A new "core" euro zone with fewer members received qualified backing from 10 economists as a possible solution, with seven of them saying Greece should be excluded from it.
Six expected the currency bloc to survive as it is although Europe's leaders have yet to settle on measures needed to solve the debt crisis, which is choking funding for Italy and Spain, the third and fourth largest euro zone economies which Europe can ill afford to bail out.
"The euro zone can and should survive, but will not survive on the current trajectory," said Jeffrey Sachs, director of the Earth Institute at Columbia University in New York.
Other respondents included Martin Feldstein, Harvard professor and president emeritus of the U.S. National Bureau of Economic Research, leading monetary economist Takatoshi Ito, former Bank of England policymaker David Blanchflower and Mohamed El-Erian, chief investment officer at PIMCO.
There was a recurring theme that to tackle the crisis the European Central Bank should either become lender of last resort, or buy huge quantities of euro zone government bonds, in exchange for binding fiscal integration.
That will prove difficult, even though it looks increasingly likely the debt crisis has already tipped the euro zone back into recession. Continued...