A collapse of the euro would wipe 12 percent off the region’s gross domestic product in the following two years, according to a report by ING Bank NV. In an attempt to quantify the possible fallout from the end of economic and monetary union, Mark Cliffe, ING’s London-based global head of financial markets, calculated the loss in output would be greater than that following the demise of Lehman Brothers Holdings Inc. Financial and trade links mean the economy of the 17 nations now in the euro could drop 9 percent in the first year of a split, he said. The dollar would surge to the equivalent of 0.85 euros and the price of oil would slide to $55 a barrel, threatening deflation in the U.S. Peripheral economies such as Spain would suffer from inflation accelerating toward double digits, while Germany and other core economies would suffer a deflationary shock, said Cliffe. The exit of Greece alone would wipe 10 percent off its GDP with neighbors losing as much as 5 percent, he said. The costs suggest to Cliffe that it would be “far costlier� for Greece to leave the euro area than to sustain the currency bloc in its current form. Leaders convene in Brussels next week in an effort to craft another rescue plan for the region. To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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