Australia Markets closed

'Euro will collapse in five years'

A top German economic adviser has sounded the death knell for Euro, saying the currency will collapse within five years.

The dire prediction was made by Dr Kai Konrad in an interview with newspaper Welt am Sonntag.

“Europe is important to me. Not the euro. And I would only give the euro a limited chance of survival.'
Asked about a specific timeframe, he said: ''A concrete period is hard to identify as it depends on so many factors. But five years sounds realistic.''

Konrad’s pessimistic comments come even as reports show Spain’s unemployment rose a staggering 27 per cent - leaving 6 million unemployed.

A record unemployment number also emerged in neighbouring France, the eurozone's second-biggest economy, as the labour ministry said jobseekers in France surged by 36,900 in March to 3.224 million, beating a record set in 1997.

Konrad noted countries should have “the freedom to get into debt”, provided they carried the ''sole responsibility'' for those debts.

"No country can pile up debt without running the risk that their investors will pull the plug. It's in each [country's] interests to keep their own debts as small as possible. Where the limit lies has to be individually decided. That depends, among other things, on economic growth and the growth of population.''

What's wrong with Spain and France

Spain, once the motor of job creation in the 17-nation single currency area, is now struggling through a double dip recession brought on by the collapse of the boom.

Its economy contracted by 1.37 percent last year, the second worst yearly slump since 1970, and the government forecasts it will shrink again by between 1.0 percent and 1.5 percent this year.

In France March was the 23rd consecutive month of rising unemployment, as Socialist President Francois Hollande struggles to revive a stagnant economy that is threatened with recession.

Hollande has pledged to curb the unemployment rate to a single-digit figure by December.

Interactive: Yahoo!7 Finance currency converter