ING: Break-up of euro would cause deep recession

8 July 2010

A report from Dutch bank ING has warned that European countries would be plunged into "deep recession" should the euro be broken up.

The failure of the single currency has been seen as one potential result of the ongoing sovereign debt crisis, but ING stated that the effects of such a move would cause further problems, reports the Guardian.

Working on the basis of the euro failing by the end of 2010, Mark Cliffe, ING's global head of financial markets research, said: "In 2011 a deep recession across the eurozone emerges, dragging down the global economy.

"In the eurozone output falls range from minus four per cent in Germany to minus nine per cent in Greece."

The global effects would also hit other countries which are in Europe but not signed up to the single currency, as well as pushing the US close to recession, it was predicted.

Earlier this week, Kenneth Rogoff, a former chief economist at the International Monetary Fund, told Bloomberg that many European banks are "insolvent" but in denial about the fact they need to be restructured.

By Claire Archer

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