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Would the Euro Survive the Exit of Both Greece and Catalonia?

Catalonia is toying with a notion to secede from Spain. President Artur Mas called for elections, and to win budget approval, depends on separatist parties, including the Republican Left party ERC, reports Edward Hugh for CNBC. In turn, ERC will want to schedule consultation on Catalonia’s independence in 2013. Spain would regard such a vote as illegal, and the possibility of a single-issue Catalan election could plunge the Spanish economy and the eurozone into deeper crisis. Other regions could follow – a weakened Europe cannot afford more assistance to Spain, Greece and others immersed in debt. Realists urge a negotiated exit from the euro for Greece; others, including the International Monetary Fund, suggest additional loan forgiveness, which could encourage reckless spending and moral hazard and also anger Europe’s most resilient economies, including Germany. Hugh concludes, “The biggest risk here is that both the Catalan and the Greek issues could come to a head just after the German elections, and the combined effect would be a very strong challenge to Euro continuity.” – YaleGlobal

Would the Euro Survive the Exit of Both Greece and Catalonia?

Catalonia could move to secede in 2013, triggering eurozone breakup; Merkel, other negotiators walk fine line between angering borrowers or their creditors
Edward Hugh
CNBC, 30 November 2012
Click here to read the article in CNBC.

Edward Hugh is a macro economist, who specializes in growth and productivity theory, demographic processes and their impact on macro performance, and the underlying dynamics of migration flows. He is based in Barcelona and currently engaged in research on aging, longevity, fertility and migration, and the impact of all of these on economic growth. Since September 2011 Hugh has been a board member at the Spanish bank Catalunya Caixa. 

Source:CNBC
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