FRANKFURT (Reuters) - Germany should consider leaving the euro if efforts to impose fiscal discipline upon indebted euro zone countries fail, the head of industrial gases firm Linde LING.DE told German weekly paper Der Spiegel.
“I fear the willingness of crisis countries to reform themselves is abating if, in the end, the European Central Bank steps in,” Linde’s chief executive Wolfgang Reitzle was quoted as saying.
“If we do not succeed in disciplining crisis countries, Germany needs to exit,” said Reitzle who was previously a board member at carmaker BMW (BMWG.DE) and head of Jaguar and Land Rover.
Asking Germans to pay more than 50 percent taxes to help fund other euro zone countries will erode the will of the German electorate to support rescue measures, Reitzle said.
Although this scenario is not desirable, he felt that German industry would survive working in a new currency.
“Of course it would lead the new currency - Deutschmark, North-euro or whatever it is called - to appreciate in value. But it would be by a lesser amount than feared,” Reitzle said.
“Although this would lead to higher unemployment in Germany because exports would take a hit, pressure would increase to become more competitive.”
Reitzle said the euro zone is unlikely to break up completely but Greece is not in a position to service its debt.
“The country is not in a position to restructure itself in such a way that it can remain in the currency union,” Reitzle said.
“In the medium term Greece needs to exit. And the writedowns on Greek debt will not be between 50 to 70 percent, but in the end will be written down by 100 percent,” Reitzle said.
So long as Greece remains in the euro it needs to be supported. “All in all this is a 500 billion-euro problem,” Reitzle said.
Structural reforms need to continue elsewhere in places like Italy too, Reitzle said.
The year of destiny for the euro is not 2012, but three to four years down the line, Reitzle said.
Upon being asked whether Linde has a plan B to cope with a complete break-up of the euro zone, Reitzle said ‘no’.
“Even if we had a recession for years in Europe, it would only impact 30 percent of our revenues,” he added.
Reporting By Edward Taylor; Editing by Greg Mahlich