Unless you’ve been hiding under a rock, you’ve probably noticed the increase in reporting this week about a possible Greek exit from the euro zone. The chart below (created with Google Trends) shows how searches and news stories about this scenario have spiked recently.
Earlier this year, Innovaro looked at this issue within the context of its Global Lifestyles project, which explores important trends and factors shaping consumers’ lives around the world.
The analysis explored what might happen if the Eurozone lost some of its members. It reported there were three primary breakup scenarios, stating:
Several scenarios for partial or full breakup of the eurozone are possible. This brief explores a severe version of Scenario 1, below, which also appears to be considered the most plausible way the eurozone might come undone according to a review of recent published analyses. (It is worth noting that use of the euro and membership in the EU itself are seen as separable, even though formal mechanisms for leaving the eurozone are lacking.)[i]
- Scenario 1: Losing PIIGS. Economic and political strains force some combination of Portugal, Ireland, Italy, Greece, and Spain (for which PIIGS is an acronym) out of the eurozone. If, on the heels of some or all of the PIIGS, France also leaves, then the eurozone becomes—in effect if not in name—an enlarged deutschemark zone.[ii]
- Scenario 2: Euro A and B. In this scenario, the euro splits into two separate currencies, essentially northern and southern euros. The northern bloc is composed principally of Germany, Austria, Finland, and the Netherlands, while the south is built around Italy and Spain. It is unclear which bloc France would join.[iii] This split might be triggered by German voters essentially forcing their country out of the euro bloc, instead of continuing to bail out other EU members.[iv]
- Scenario 3: End of the euro.In this scenario, the currency ends its existence, and the countries of Europe revert to their former national currencies.
The analysis explored a severe version of Scenario 1 and, in keeping with the mission of the Global Lifestyles project, concentrated on the effects on consumers’ lives and the implications for business.
To add to the conversation on this important topic, we’re making our research brief available here: GL 2012 8 Eurozone Breakup, and let us know if you’d like more information about Innovaro’s trend & foresight services.