Economics has few laws, which is why economic forecasts are so maddeningly unreliable. If it has one law, it is this: that if you fix together some things which naturally vary, such as interest rates and exchange rates, other things, such as unemployment and wages, will vary more instead. And in a single currency zone, which has exactly this effect, you can only get round these problems by paying big subsidies to poorly performing areas, and expecting workers to move in large numbers to better performing ones.

 

This is what happens in the United States, or indeed within the United Kingdom. In general it works. In the eurozone it does not work, because either Greeks have to cure their poor economic performance or Germans have to pay them big subsidies forever, and neither are willing or able to do so. This, in a sentence, is the problem of the eurozone, and continued denial of it will only make that problem worse.

David Fuller's view

Here is a PDF of William Hague's article.

I think this is a basic truth.  The Euro was a political rather than economic construct.  It will not work over time, unless independent nations give up their sovereignty and the EU becomes a federal state.  I maintain there is no groundswell of public opinion in favour of this.  We are talking about proud, mostly successful and independent countries which have existed for centuries.