Worst-Case EU scenario

[Chris]

Right now, the EU has major problems with Greece, Italy, Spain and Portengul - and very few other countries can call themselves truely safe. What might happen if the economic union splinters completely?

Chris

[WestVirginiaRebel]

At the very least it means the end of the Euro; Germany emerges as one of Europe's leading economic powers. France probably gets another Republic.

[Adler17]

For Germany it will become tough as well. For at least a decade some countries would have problems in buying German goods, as the D-Mark would be now much higher valued than the Euro. I hread about estimations of about 150% added value. Once one Euro costed 1,95883 DM. So the DM would be then a 1,50 to one Euro. That means the German machines and chemicals and so on would be much costlier. True, due to cheaper imports that could be reduced to a certain degree, but it would not change much. There would be problems in 46% of the German market to buy these products.

Furthermore hundreds of billions of Euros would be lost for the German economy, as either the guarantees for Greece were gone or the investments of German firms in certain countries.

To cope with this money would be printed and cause a new inflation. While then the debts would be away, Germany has currently debts of 80% of the GDP, the money of the population would also be away. Good for them, who have debts.

Germany would be in a recession as well, but could handle it better than Greece or Spain. Indeed I don't think Greece being able and willing to reform the country. There was and unfortunately is no will to do so. If you have an authority to supervise a lake, which does not exist since 40 years, you have a big problem. Or if 50 billion Euro taxes were not paid, each year! Only half of that is needed to cope with the problems. Corruption is a main problem. And bureaucracy. If you want, as a foreigner, to buy a Greek island you need about 30(!) authorities to give their okay, including the ministry of defense. Most of the buyers retreated after this. The record is now after the 8th authority. And believe me, they don't work fast.

Spain is now in a deep recesion and I don't see an end of that until 2020. Here we have a moderate debt quote, "only" 60%, but due to the estate bubble bursting it will remain problematic as the whole country is hit. However, reforms were made and others need to come.

Italy is in a better shape. Here some reforms might make the industry working again, as they produce too costly. Furthermore more taxes needed to be paid as well. But the base to do so is there. However, the power of the labour unions must be broken as well. It is nearly impossible to fire someone in a company with over 15 employees. Thus many firms are not bigger, although they could and sometimes needed to do so, or don't hire someone without time limit. Corruption is also an issue.

Portugal and Ireland are on a good way. It will last some time, but the problems seem solveable.

Belgium has a great deficite. That and the problematic building of a new government, Belgium set the new world record of a land without government in peace times, due to the tensions between Flames and Wallons make this country another big problem within the EU.

France has also many problems. They had invested heavily in the so called PIGS states (Portugal, Ireland, Italy, Greece and Spain are called PIIGS as they make economic worries now. But France did not invest in Ireland so much). Furthermore France needs reforms as well, but the current president has fought against them and IMO will be forced to accept them soon. He won't have the money to fulfill his socialistic dreams.

Although Britain is not part of the Euro zone, they are, too, in big problems as industry production is reduced. There will be a plebiscite in Scotland. They are still relying too much on the banks. One day they will be in more severe problems because of this. Thanks to Thatcher.

Germany is now a save haven and perhaps the greatest pillar of stability. Problem is, they can't save the whole EU without becoming serious troubles.

Adler

[Valdemar I]

The problem is that it's hard to see the worst case scenario as realistic, simply because a collapse of EU and what happens after it is hard to imagine!

A realistic collapse would be EU devolve into a glorified version of EFTA, with a few core countries Germany, France, Benelux and a few other countries (Austria and Italy maybe) creating a close federation, which would make this post-EU custom union nothing more than the clients of core-EU.
With a collapse of EU maybe we will see Forbundsstaten (the Federal state) Norden being created by the Nordic countries. Scandinavism seem to have gotten something of a renaissance in Sweden and with EU collapsing the other Nordic state may adopt the same idea out of economic needs.