Goldman Sachs Chairman Says Euro Will Survive

A leading economist has told Sky News that he thinks the euro will survive - although some countries may have to leave the single currency.

Jim O'Neill, Chairman of Goldman Sachs Asset Management, told Sky's Jeff Randall Live that European leaders wouldn't give up easily, despite the continuing crisis in the eurozone.

"Germany and France put this thing together because they didn't want the rather less pleasant parts of the past 100 years to repeat itself."

"So they're not going to give this thing up," he said.

He added that he didn't think the poor economic circumstances would win out over the political will to sustain the euro, over the next twelve months.

Mr O'Neill said he was disappointed with the outcome of the recent European summit where 26 leaders agreed on a new fiscal pact, saying that France had hindered Germany's attempt to resolve the crisis.

"It's gotten wrapped up in a lot of typical European games, which France is at the core of."

He added, however, that a totally new approach was needed to resolve the crisis, including intervention from the European Central Bank (ECB).

"Germany has got to consider accepting a higher inflation rate than is probably in the minds of many Germans, and this is within the ECB mandate."

His comments come as the International Monetary Fund (IMF)'s top official in Greece said the government there would have to cut more public sector jobs to reduce its budget deficit.

The IMF and eurozone countries have been propping up Greece's economy with rescue loans since May 2010, imposing stringent demands that have driven the country into recession.

The IMF estimates that Greece needs to devalue its currency by up to a third to return to growth, but it is unable to do so while it remains a member of the eurozone.

Economic forecasters say Greece is heading toward its fourth year of recession in 2012.