The Germany obviously plays a leading role

Peter Westaway, with Nomura, presents his economic scenario for the euro area. If he has never believed in a collapse of the Monetary Union under the effect of the sovereign debt crisis, he believes that the challenges are great, especially for the European peripheral States engaged in very harsh austerity plans. The Economist analyses the situation of the France, which must present this week the finance bill for 2011. It is also on the Greece and monetary policy.

Is there a risk of economic relapse in the euro area

This is not our scenario. Austerity programs implemented in Europe under the pressure of financial markets are likely to be 0.5 of GDP next year, and the euro zone should not return to its peak of growth before 2012, but I believe in a timid recovery. We believe it 1.6 this year, and this despite concerns over the US economy. The Germany obviously plays a leading role. The growth of the country was still higher than expected, with the jump in exports to Asia, to the weakness of the euro and rates. These factors however do not use peripheral economies.

Do you think that the France will succeed his bet to reduce the budget deficit to 3 of GDP in 2013

There are many uncertainties on the capacity of the France to perform the announced budget cuts. On the one hand because the country is not a history, very encouraging for fiscal consolidation. On the other hand because the schedule is disrupted by the presidential election of 2012. In addition, the Government for the next year forecasts are overly optimistic. It will do more because growth will be somewhat lower than the 2 now anticipated by Bercy. What the threat of degradation of the "AAA" to the France note can be a sufficient incentive In any case, it is a risk that cannot be excluded in two years. The rating agencies might crack down if the share of government revenue devoted to payment of the interest on the debt would reach the threshold of 10 (6 today, Editor's note). After our strategists, the difference in rates between the France and Germany (35 basis points) is currently too low. In June, when it was overtaken by the sovereign debt crisis, the France saw its risk premium jump 55 basis points. This level probably better reflected reality.

Do you think that the Greece can fail or be forced to restructure its debt

Non. What I understand recent statements by some members of the ECB, is that there is not place to worry about the fate of the Greece in three years, at the time where will expire support plan, as one can imagine an extension of the device. The current discourse of the Institute of broadcast on the need to reduce the dependence of the banks to refinance is to react the States. But, in reality, I do not believe that the European Central Bank will cut oxygen to Greek banks early 2011. Only restructuring can consider would in my view the following form: the Greece Exchange Greek bonds held by the ECB against new titles of the same value but longer maturity.

How do you see the output of the device of crisis of the ECB

I think that the European Central Bank may raise interest rates without standard liquidity conditions to support banks. The purpose of monetary policy is to control inflation, that is why we believe that it can act as early as April, more early than what the market expects. So far, the monetary rates day by day, the Eonia, should back only gradually. It be, in our view, the level of the rate of refinancing of the ECB to summer 2011. In our scenario, the Fed, it will not report the rent of money before end of 2012, the Bank of England act in February 2011.