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Happy birthday, euro?

Breaking_euroThere is a 99% probability the euro will break up in the next decade, according to predictions by a leading think thank, released just days after the single currency turned ten.

In its latest forecast, the Centre for Economics and Business Research says it now looks as if “2012 will be the year when the euro starts to break up”.

“It is not a done deal yet,” says Douglas McWilliams, the chief executive. “We are only forecasting a 60% probability, but our forecast is that by the end of the year at least one country and probably more will leave.”

The think tank also forecasts a “modest to severe recession” in the west, albeit possibly excluding the US. In Europe, depending on how the single currency is managed, economic growth is forecasted to decline by between 0.6% and 2%.

Outside the eurozone, the UK is also likely to fall back into - or has already fallen back into - recession.

The US, on the other hand, is forecasted to be the “western economic star” with economic growth of around 2%, driven by the strength of profitability and the applications of technology.

“We expect inflation to fall sharply,” McWilliams says. “Yes, I know we said this last year and were badly wrong, but the laws of economic gravity tend to work eventually. The most difficult thing is to get the timing right!”

On January 1, 2002, the euro banknotes and coins were officially introduced as a legal tender by the twelve member states.

©2012 funds europe