Economist says membership of eurozone should fall to 10

A workable solution to the eurozone debt crisis would involve reducing the membership from 17 countries to about 10, says British economic historian Robert Skidelsky, who declined to say if Ireland should be part of this group.

“I have not seen any plan yet that will enable this structure [the eurozone] to go on.

“The plan that would enable the eurozone to survive is not politically viable,” said Mr Skidelsky in an address to the Institute of International and European Affairs yesterday.

The economist argued that Ireland was in “a particularly bad situation”, because the Government could not pursue expansionary policies, either in the form of printing money or devaluing the currency.

“I was in Dublin a few years ago and I urged Irish politicians to team up with other European politicians to row back on austerity policies,” said Mr Skidelsky.

He believes there has been an awareness across the eurozone that there has to be growth initiatives, “but these growth measures are too little and probably too late to save the euro”.

The currency’s biggest structural flaw is that German political leaders thought their country’s approach — budgetary constraint and low inflation — could be replicated across 17 countries.

“Unless there is a compromise between the German supply-side and a Keynesian view, then the euro will break up.”

He feels the economic crisis has worsened because western countries pursued “deeply erroneous” policies of cutting back on government expenditure amid private-sector retrenchment.