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If not Emu, then what?

Think the unthinkable for a moment. If Emu were cancelled, what would be the result: chaos in the markets? The end of the European Union? Perhaps nothing terrible at all. By Tess Read.

Life under the euro

"Europe is looking down the barrel of a gun," says a leading City of London analyst. "If Emu doesn't happen, meltdown might." This doomsday view is certainly not one shared by all market analysts. But might there be more truth in it than most politicians seem willing to admit? The first questions to ask are what is actually meant by meltdown, what are the reasons why it might come about, and what are the alternatives for Europe?

A study by the Federation Trust for Education and Research has forecast four possible outcomes for Europe: an Emu with many country members, a smaller Emu of a few countries, a Europe that looks much as it does today but without the hope of future monetary integration and, finally, the so-called meltdown option.

The Federation Trust study elaborates on the last possibility, painting a picture of a disintegrating Europe in which structures of cooperation and mutual benefit collapse. This would mean the end of the post-war dream to build Europe into "the third way" - an economic power bloc to rival those of the US and Japan.