The euro has only a 20 per cent chance of survival

It is possible that the eurozone may not even survive next year according to the Centre for Economic and Business Research.

Chief executive Douglas McWilliams said the euro has an 80 per cent chance of failing in its present form in the next 10 years.

He said living standards would have to fall by about 15 per cent in the weaker economies and Government spending slashed if the single currency was to survive.

Mr McWilliams added: “There is no modern history of falling living standards in peacetime on the scale necessary to keep the euro in its current form.

“Indeed the scale of the cuts necessary was only just achieved in wartime. That is why I think there is at best a one-in-five chance the euro will survive as it is.”

The CEBR warned that the financial problems which have crippled Greece and Ireland will spread to other European countries mired in debt.