The European disunion - will the euro survive?

Part of the reason why southern European nations like Spain and Greece are currently in so much debt is that the northern European nations were prepared to lend to them the cash in the first place, explains Simon Tilford, chief economist at the Centre for European Reform. The construction boom in Spain, for example, wasn't financed out of nowhere: it was fuelled by enormous sums of cheap cash borrowed at very low rates. "There were huge imbalances within the eurozone, so you had big export surpluses in Germany which were being channeled into housing and construction booms in the south. Most of the growth in those southern economies was built on debt, and now they can't get out of it." The obvious solution, he said, would be to devalue their currency, making exports cheaper and the economy grow, but that is not an option as long as they remain in the euro. Without such growth, though, the tax base - vital for paying off any big public debts - will never increase.