NOBEL PRIZE-WINNING ECONOMIST Paul Krugman has advised Irish voters to vote No in Thursday’s referendum on the Fiscal Compact.

“I’ve thought about it, it’s hard. I would say vote No,” he said on BBC Radio 4 this morning. Krugman dismissed the suggestion that a No vote would anger Germany and see Ireland cut off from bailout funds or from the Eurozone.

“At this point the Germans need to face the reality that this cannot work and that the Irish, who’ve been such good soldiers in this crisis, if even the Irish say no then that would actually send a helpful message,” he said.

Krugman said that austerity is a “deeply destructive policy” which is “failing dismally”. He blamed the vanity of politicians for pursuing a policy which he said is not working.

“The whole intellectual framework has been tested to destruction in the Eurozone,” he said on the Today programme on BBC Radio 4 this morning.

Krugman said that the Eurozone was on the wrong track because it has a single currency without having a single government. “European currency union was a mistake since the day the Maastricht Treaty was signed,” he said.

The New York Times columnist and Princeton professor has long argued for a Keynesian approach to the current economic crisis which would focus on spending rather than cuts.