The head of the world’s largest bond management firm has warned the euro zone will be unable to fund future bailouts and it will probably force some of its 16 nations to abandon the currency within five years. This includes Ireland.

The chief executive of investment management firm Pacific Investment Management Company (Pimco), Mohamed A El-Erian spoke to CNBC. He said that he believes Spain and Portugal are likely follow Ireland in drawing on the European Union's bailout fund.

He said “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…As long as they're being seen as reactive we're going to have a slow-motion wreck going on in Europe. We're going to wake up and it's going to be a new country we're talking about."

He said that continuing solvency problems would undermine hopes of a recovery. El-Erian  said “Unless we see more than just liquidity support, unless we see something that deals with the balance sheets, expect this contagion to go up."