Along with the tension around potential future of the Greek and Portuguese fiscal policy, a question appears comes up again – what would happen if these countries quitted eurozone. According to projections of the Swiss investments bank UBS in September last year, such a decision would cost Greece and Portugal 50% of their gross domestic product.

A eurozone country with a more robust economy, such as France or the Netherlands, would see 20% to 25% of GDP disappear if they went back to operating their own currency.

For Greece the loss would be $165bn (£100bn) from its $330bn annual gross domestic product, while France would suffer a loss of $660bn from its $2.65 trillion annual GDP, UBS said then.

They also say that the stark warning to eurozone members that a breakup of the euro currency club will cost them dear follows several speeches by policymakers and economists that the status quo is untenable.

Already in September UBS emphasized that under the current structure and with the current membership, the euro does not work. Either the current structure will have to change, or the current membership will have to change.

«If Germany were to leave, we believe the cost to be around €6,000 (£5,250) to €8,000 for every German adult and child in the first year, and a range of €3,500 to €4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. In comparison, the cost of bailing out Greece, Ireland and Portugal entirely in the wake of the default of those countries would be a little over €1,000 per person, in a single hit.»

UBS analysts Paul Donovan and Stephen Deo also fear wider political ramifications. “There are also political costs to consider. Europe’s ‘soft power’ influence internationally would cease. We note that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.”

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