The euro zone region's inability to fund future bailouts will probably force some of the 16 euro nations, including Ireland, to abandon the currency within five years, the head of the world's largest bond management firm has warned.
Mohamed A El-Erian, chief executive of investment management firm Pacific Investment Management Company (Pimco), told CNBC that Spain and Portugal are likely follow Ireland in drawing on the European Union's bailout fund.
Mr El-Erian, whose company has more than $1 trillion under management said the EU has not taken control of the crisis.
"The first rule of crisis management hasn't been met by the Europeans, and that is to get ahead of the crisis, be seen as proactive rather than reactive," Mr El-Erian told CNBC.
"As long as they're being seen as reactive we're going to have a slow-motion wreck going on on in Europe. We're going to wake up and it's going to be a new country we're talking about."
Mr El-Erian warned that continuing solvency problems would undermine any hopes of recovery.
"Unless we see more than just liquidity support, unless we see something that deals with the balance sheets, expect this contagion to go up," he said.