The European economy is in a state of crisis, to the point that some people are thinking that the Euro, the pan-European currency (except for the British pound a few others), may be finished. Some businesses are planning what to do if the Euro ceases to exist:
International companies are preparing contingency plans for a possible break-up of the eurozone, according to interviews with dozens of multinational executives.
Concerned that Europe’s political leaders are failing to control the spreading sovereign debt crisis, business executives say they feel compelled to protect their companies against a crash that can no longer be wished away. When German chancellor Angela Merkel and French president Nicolas Sarkozy raised the prospect of a Greek exit from the eurozone earlier this month, it marked the first time that senior European officials had dared to question the permanence of their 13-year-old experiment with monetary union.
“We’ve started thinking what [a break-up] might look like,” Andrew Morgan, president of Diageo Europe, said on Tuesday. “If you get some much bigger kind of … change around the euro, then we are into a different situation altogether. With countries coming out of the euro, you’ve got massive devaluation that makes imported brands very, very expensive.”
That wouldn’t help American exports. But it would mean the dollar would suddenly become very, very strong. That sounds like a good thing, but it would probably mean more dollars flowing out of this country into foreign imports and investments.
What might the breakup of the Euro mean for the American economy?