Predictions and prescriptions for a eurozone break-up are skyrocketing – but there is no chance of the eurozone dissolving. Peripheral countries such as Greece will stay put. Germany will never leave.
Germany accounts for little more than one per cent of the world’s population – and nearly nine per cent of its exports. A common currency ties Germany’s strength to the eurozone’s relative weakness. The shared single currency is significantly weaker than the standalone German currency would be. This subsidises German exports, making them more affordable internationally.
When Germany joined the eurozone, it came with a price: abandoning the D-Mark for the euro. Happily, it turned out the price was a prize. The political benefits of the current situation are clear – Germany can shape fiscal integration on its terms, even if it comes with a steep price tag. Explaining this to the German public will not be easy, and it will be a long and winding road to European fiscal health. But this road goes through the eurozone – and Germany will pay top dollar for the driver’s seat. Read more