Eurozone runs the risk of going up in flames

LAST week I had a scary near-miss moment. I was so distracted by uploading photos of myself looking smug on Centre Court at Wimbledon that I forgot to switch off the hob. Next morning, I discovered the gas had burned all night, perilously close to the tea towel and the dog.

But Wimbledon was so much more exciting than the spag bol. I saw Sir Trever McDonald and Annabel Croft and some kids’ TV presenter from the 1980s.

Having avoided certain death at home, I headed to work where I was promptly distracted by scenes of high-drama in Athens – black-hooded youths hurling stones in the shadow of the Acropolis and knife-edge votes in parliament and so on.

Elsewhere, the hob was burning and the dog was looking worried, metaphorically speaking.

We’re already on the second round of bailouts for Greece, but that’s only one of the so-called “PIIGS”. Ireland and Portugal aren’t fixed. Spain and Italy may have avoided a bailout so far, but they aren’t out of the woods.

Spain has made valiant attempts at reform, but yields on 10-year Spanish debt have remained stubbornly above five per cent. In Italy public debt is 120 per cent of GDP, growth is low and efforts at structural reform are slow.

One man who didn’t leave the hob on last week was Hans-Werner Sinn, president of the Ifo Institute, who wrote about the murky outlook for the Eurozone.

He points out that thanks to the ECB, peripheral European countries have been living beyond their means and the European Stability Mechanism has allowed them to continue running vast current account deficits even longer. This is unsustainable and not just limited to Greece.

Sinn argues Ireland has cut wages and now ordinary citizens of several European countries must concede to being materially poorer to resolve a serious mis-pricing of assets. That’s tough to stomach.

Closer to home, the prospect of shrinking pensions was enough to send hundreds of thousands of UK public sector workers out on strike. And we don’t exactly have phenomenal growth either. Oh, and remember the US debt ceiling deadline which is less than a month away?

I don’t subscribe to the double-dip theory, but I do think we need to stop being so easily entranced by successive dramatic headlines and keep a broader view of what’s turning out to be a patchy recovery. And one other thing. You may have some exciting photos to show your friends, but don’t forget to switch the hob off first.

Beccy Meehan is a presenter at CNBC Europe.