Anthony Hilton: Keep calm … if euro collapses we can still carry on trading

With the drachma likely to plunge most, the biggest price cut may well be on retsina

It is part of the accepted wisdom that the collapse of the euro would be a disaster for the UK, but when was accepted wisdom a useful guide to anything? Half our exports go the EU but exports these days account for 26 per cent of GDP. So even if exports across the Channel collapsed entirely it would still put at risk only 13 per cent of GDP. That leaves 87 per cent carrying on much like before.

It is reasonable to expect some disruption of exports, but would it not also be likely that there would be a similar collapse in our imports from the eurozone? And given that we import more from those countries than we export, is not the trade effect likely to even out?

However, this is all a bit vague. It is more helpful to look in more detail at what we trade, where it comes from and where it goes. It matters for example that a lot of what we import from the most troubled southern European nations and Ireland is food.

If the euro were to disappear and these nations relaunched their old currencies then one would expect these to fall in value compared to the pound – which means that those food imports would be cheaper. Is that so bad? Admittedly, however, with the drachma likely to plunge most, the biggest price cut may well be on retsina so it is not all good news.

Our biggest export earners are financial services and pharmaceuticals. The main markets for these are the more affluent northern European countries, whose currencies one would expect to appreciate – making our sterling priced exports a little bit cheaper and a bit more competitive. So while there might be a loss of volume it is reasonable to ask how deep and how long lasting that is likely to be in reality.

Obviously no one knows. You can never model these things because there are just too many uncertainties, but I do take comfort from an article written the other day by Gabriel Stein and published on the Official Monetary and Financial Institutions Forum website.

He pointed out that more than 70 monetary unions had disappeared since the Second World War and most of us hadn't even noticed. This would suggest that while such disintegration was usually fraught, and sometimes very difficult, there is no evidence that it has to be cataclysmic.

The other bit of conventional wisdom which is past its sell by date is that the UK's poor performance is all the fault of the eurozone. It may suit George Osborne to blame the continentals but it does not wash. Germany is slap bang in the middle of the currency bloc and it is still managing to grow. So too are countries on the edge like Sweden and Norway, and most remarkable of all is the transformation of Iceland. It had a banking crisis like no other but the latest figures show its economy growing at 2.4 per cent.

It matters. If we could persuade Osborne to accept that our problems are home grown, then he might accept that they are going to have to be fixed at home as well – and start doing something about it.

PROMOTED VIDEO
Arts and Entertainment
AKB48 perform during one of their daily concerts at Tokyo’s Akihabara theatre
musicJapan's AKB48 are one of the world’s most-successful pop acts
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
News
The headstone of jazz great Miles Davis at Woodlawn Cemetery in New York
news
Arts and Entertainment
Brendan O'Carroll has brought out his female alter-ego Agnes Brown for Mrs Brown's Boys D'Movie
filmComedy holds its place at top of the UK box office
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Arts and Entertainment
Eminem's daughter Hailie has graduated from high school
music
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Super Mario crushes the Messi dream as Germany win the 2014 World Cup in Brazil

Super Mario crushes the Messi dream

Germany win the 2014 World Cup in Brazil
Saharan remains may be evidence of the first race war, 13,000 years ago

The first race war, 13,000 years ago?

Saharan remains may be evidence of oldest large-scale armed conflict
Scientists find early warning system for Alzheimer’s

Scientists find early warning system for Alzheimer’s

Researchers hope eye tests can spot ‘biomarkers’ of the disease
Sex, controversy and schoolgirl schtick

Meet Japan's AKB48

Pop, sex and schoolgirl schtick make for controversial success
Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor