Press

John Springford of the CER, warns that the nature of the crisis will have far-reaching effects. "Even in good times the rate of youth unemployment is higher than for older people, but the time spent out of work is usually short. Now the rate is much higher, and young people are out of work for much longer periods."

"Take the troika's forecasts of Greek GDP with a hefty pinch of salt, because the economy is in free fall," said Simon Tilford, an economist at the CER in London. ... "There will be have to be haircuts on the loans made to Greece by the eurozone governments ...

"There is definitely going to be an effort to present things in the best light possible, but the fact remains that as soon as we are talking about more ambitious forms of defence cooperation, which require large budgetary investments, it's really hard to progress and it's going to remain so for the foreseeable future," said Clara O'Donnell of the CER. ... O'Donnell said that, given its own budget woes, Washington wants to rely more on allies to take responsibility for their regions so the United States can reduce its involvement.

The blooming bromance between Ed Balls and Lord Mandelson had to be seen to be believed. Odd couple does not even begin to cover it. But it seems the old enemies over the euro are now as one on how to save the eurozone. Yesterday, they went public at an event organised by the Centre for European Reform think-tank.

But Charles Grant, director of the CER, says the Greek economy will be thrown into greater turmoil if it exits the currency bloc. Without the financial support of the eurozone and the International Monetary Fund, Greece will have to print money to pay salaries and pensions. "You'd get hyper-inflation, at the same time Greece would devalue its currency, so it would become more competitive and it might start to export more, [but] it wouldn't take away the need for austerity," Mr Grant said.

"Merkel will find it hard to resist them all," said Charles Grant, director of the Centre for European Reform in London.

Lord Mandelson also joined Mr Balls on the platform of a Centre for European Reform event and praised the shadow chancellor for his "prescient" speech two years ago at Bloomberg in which he warned of the dangers of sucking demand out of the economy as a storm approached.

"If Greece moves towards exiting the euro ... the EU would then need to enlarge its bailout funds and prepare other emergency measures," said Charles Grant, director of the CER. ... "They should tell the Greeks that if they wish to stay in the euro they cannot avoid austerity and structural reform ... But to raise the Greeks' morale the EU will have to relax Greece's deficit reduction targets, write off much more Greek debt and think more imaginatively about how to encourage external investment in Greece. Merkel will find such policies harder to embrace than Hollande."