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There would be a run on banks in peripheral countries.
In peripheral countries this could mean a drop in living standards of around a third – a recipe for social breakdown.
That's something increasingly appreciated by the population in peripheral countries, especially Ireland.
In public they should insist loudly on their firm commitment to subsidiaries in peripheral countries.
Within Europe, there have been especially spectacular falls in peripheral countries such as Ireland and Spain.
Unemployment is extremely high in peripheral countries, stoking fears of unrest.
Similar(22)
For the most part, the European Central Bank has been unwilling to step in aggressively — it has bought only 77 billion euros in peripheral-country bonds so far.
In return for this, the core countries would pay for a big write down in debts in the peripheral countries.
While there is nothing new in weakness in the peripheral countries, exports to France have turned soft as well.
In Finland, which like the Netherlands had been among the loudest in calling for austerity in the peripheral countries, the economy shrank in the quarter.
Consumer prices are falling in several peripheral countries, notably Cyprus and Greece, but also now in Spain, where in March they declined by 0.2% on a year earlier.The advent of deflation in the euro-zone periphery can be seen as part of a one-off adjustment as the crisis countries claw back lost competitiveness.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com