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The euro has completely broken down as a workable system and faces collapse with “incalculable economic losses and human suffering” unless there is a drastic change of course, according to a group of leading economists. Europe is “sleepwalking towards disaster”, according to the 17 experts, who warned that over the past few weeks “the situation in the debtor countries has deteriorated dramatically”. “The sense of a never ending crisis, with one domino falling after another, must be reversed. The last domino, Spain, is days away from a liquidity crisis,” said the economists. They include two members of Germany’s Council of Economic Experts and leading euro specialists at the London of School of Economics, all euro supporters. “This dramatic situation is the result of a eurozone system which, as currently constructed, is thoroughly broken. The cause is a systemic failure. It is the responsibility of all European nations that were parties to its flawed design, construction and implementation to contribute to a solution. Absent this collective response, the euro will disintegrate,” they added in a co-signed report for the Institute for New Economic Thinking. The warning came as contagion from Spain pushed Italy’s borrowing costs to danger levels, with two-year yields rocketing 40 basis points to more than 5pc. The Milan bourse tumbled 3pc, led by bank shares. Italian equities have been in freefall since it became clear two weeks ago that the EU’s June summit deal had failed to break the nexus between crippled banks and sovereign states.

The crisis is starting to ricochet back into Germany, where the PMI manufacturing index for July fell to its lowest since mid-2009. Doubts are emerging about the creditworthiness of the German state itself.

Well, I never thought I would admit it, but I am just another old “saddo” who writes all these comments with passion. This whole European saga goes on and on. We have seen our European leaders go through a wide spectrum of so-called solutions to the euro crisis, with tax hikes, austerity, unsustainable borrowing, a European central bank, and several other “solutions”, but the end result is always the same – the weaker countries get weaker, and even the almighty Germany now faces a downgrade by the credit rating agencies, because of their exposure to the debt crisis. There is only one solution to Europe’s problems, and that is to drop the idea of a single currency. In principle it was a great idea, but in practical terms it could never work. There is simply no way that each and everyone of the European economies with such widely different economy bases, from manufacturing to tourism, and many in between can hold the value of the euro to within the tight limits imposed. Almost all of Europe needs growth and increased tax revenue. This cannot be achieved against a background of high unemployment and businesses closing down. To create growth and tax revenue most of Europe needs to devalue its currency, but this is not possible whilst they have to adhere to the demands of the single currency. Despite several comments saying that the euro will survive, all I can say is they are wrong, the euro can't and never ever could work across the many different economies all across Europe. Make no mistake about it until the financial markets see that there is a credible solution to create growth and increased tax revenue across Europe as a whole, they will continue to remain in turmoil..... An association representing German banks has called for an extra year to implement tougher rules that would force them to hold more cash as a buffer against possible financial crises. The BVR group of private and public banks called for a delay until January 1, 2014 for the entry into force of the so-called Basel III regulations due to the "enormous technical restructuring and implementation work" needed. The planned implementation at the beginning of 2013 was "no longer realistic" said the group.