Former IMF Chief Gives Eurozone Warning

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The IMF's former chief economist warns the latest bailout fund is not enough to deal with the eurozone crisis.

Speaking to Sky News' economics editor Ed Conway on Jeff Randall Live, Professor Ken Rogoff said: "Europe is in a deep governance crisis and the scale of it is really outside the bounds even of this firewall of money, especially when you consider some of the money is coming from debtors that we're worried about.

"Europe put up $200bn (£124bn) of the total. Europe is the problem so in some sense it exaggerates how big it is."

Prof Rogoff served as an economic councillor and director of the research department of the International Monetary Fund from August 2001 to September 2003.

He was also on the board of governors of the Federal Reserve System. Prof Rogoff is currently a professor of public policy and economics at Harvard University.

He also said: "The UK is so vulnerable to what's going on in Europe, with the UK recovering from this massive financial crisis.

"At the end of the day the UK needs to find ways for growth with or without the eurozone because it may not figure out how to grow, but I don't think this is a matter of fiscal stimulus leading to this growth, it's a matter of restructuring."

He said on the status quo of the eurozone: "I don't think the status quo, even with these tweaks and fiscal rules even the euro bond, is going to be stable so they're going to need a tighter union.
"I think that some of the countries will end up outside of that, at least for 30 or 40 years because they aren't ready to be in a tighter union. I don't think it will be preserved."

Britain has committed a further £10bn to the IMF's bailout war chest. The financial organisation has raised more than £269bn for its global bailout fund.