Eurozone crisis is a 'bomb about to explode', says Neil Record

The eurozone crisis is a bomb that could still explode, and should be dominating everyone's thinking if it is to be contained and resolved, according to Neil Record, founder and chairman of Record Currency Management.

Speaking in an exclusive interview with FX Week, Record explains his ongoing concerns about the eurozone crisis, following his prediction as early as 1995 that the currency union would struggle to survive.

"Today the euro is, in my opinion, mortally wounded. When I originally wrote in 1995 about why the euro would fail, I didn't believe that market forces would dictate who would stay in or out – I thought the decisions would be purely political. I was wrong about that – the scale of fiscal incontinence in the southern eurozone member states has meant the market now has the upper hand. In 1995, I didn't believe that it was possible that a eurozone member state would default on its sovereign debt," says Record.

Record's submission to the high-profile Wolfson Economics Prize, which challenged entrants to propose the best contingency plan to manage a break-up of the currency union, was recently announced as one of five out of 452 entries to be shortlisted. His submission, which could see him win £200,000 in addition to the £10,000 he has already received for being shortlisted, focuses on the creation of a secret taskforce to deal with a eurozone break-up.

"I think there has been a horrible miscalculation in that people – actually, the political classes – believed the euro would help countries be more like each other, or, rather, more like Germany. But it hasn't changed them at all. National culture runs deep – was that really going to be achievable in 10 years? I believe it was a terrible mistake and what we will see now will be very, very painful indeed," says Record.

Record is now further developing parts of his essay and answering questions posed by the judges, with a deadline of May 29. The winner will be announced on July 5.

The scale of fiscal incontinence in the southern eurozone member states has meant that the market now has the upper hand

To read the full interview with Neil Record, click here.