An exiting country would face a huge problem with its debt – quite unlike the experience of classic devaluations, such as the UK’s in 1992. For once it has left the euro, its debt will be denominated in what will then be a foreign currency – and in relation to relevant domestic values, such as tax revenue, the value of that debt will have soared. The government should redenominate its debt in the new national currency and make clear its intention to renegotiate the terms of this debt. This is likely to involve a substantial default – enough to cut the ratio of debt to GDP to 60pc.