A partial break-up of the euro-zone, with the weakest economies leaving and the core holding together, could be part of the solution to Europe’s problems, rather than the disaster that many assume. As such it would ultimately be positive for the rest of the world too. Initially, though, the uncertainty and disruption is likely to cause a deep recession in Europe and undermine growth elsewhere. Suggestions that the global fall-out could be “even worse than Lehmans” should prove wide of the mark, but the main risks over the next year or so would lie on the downside.
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