Where next for the eurozone?

What will the eurozone look like in twelve months?

There are two answers to the cruel questions posed to Greece by the single currency and the Euro wars, writes John Redwood.

The simple and best one would be for Greece – and a few others – to leave the Euro, re-establish their own currencies, devalue and price themselves back into work. This remains unlikely, given the huge political capital invested in the Euro scheme.

The second, he says, is for the Euro zone to press on with the creation of a country called Europe.

It’s double or quits time. Either German and French taxpayers accept their obligation to subsidise Greece, or Greece has to leave. It also means the EU(euro section) needs to develop its rapidly emerging control over Euro member economies even faster. If rich areas in the zone have to subsidise poorer areas, they will expect control over the budgets and borrowings they have to subsidise.

True from an economic standpoint. But the Greek voters certainly won't stand for it. And eventually, when their governments run out of ways to fudge the truth, German and French voters won't either. And that's before the anti-bailout parties in Finland and The Netherlands start raising the roof.

So contingency planning in Berlin and Paris (Brussels has scarcely a walk-on part here) will be concentrating on a smaller eurozone, because Greece will have to leave.

One issue: how do they force out the weaker members in one hit, to convince the markets that a smaller eurozone will survive? Because the speculators will look for the next weak link. In this scenario of course Ireland and Portugal will "be resigned".

Spain? Italy? Belgium?

The politicians will probably take a deep breath and decide to include them in the new, smaller eurozone. With closer integration and control?

No, they'll continue to fudge that.