EU at ‘crunch point’ over future of the Eurozone says expert
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
This comes as the eurozone is descending into “crisis”, according to finance expert Alasdair Macleod. The euro is facing high debt and rapidly spiralling inflation. In June, eurozone inflation rose to a record level of 8.6 percent and energy prices rose at an annual rate of almost 42 percent, compared with 39 percent in May.
The rising prices come in the wake of the global pandemic and have been exacerbated by Russia’s war in Ukraine.
Speaking about the problems facing the eurozone, Mr Macleod said: “The euro system and its currency are descending into crisis.
“Comprised of the ECB and the National Central Banks, the system is over its head in balance sheet debt, and it is far from clear how that can be resolved.”
He said that the issue has sent Germany’s economy into crisis, warning that the country may see “riots and growing political instability” as a result.
The expert explained: “The euro is sliding.
“Markets can see that all the ECB is doing is talking the talk and otherwise is frozen into inaction.
“The economic consequences have been to put Germany’s economy on life support with its industrial limbs beginning to shut down, along with the productive capacity of many other EU states.
“In the coming months, there will be food shortages exacerbated by lack of fertiliser supplies.
“Then there will be winter without heating fuel and frequent power cuts.
“And winter with food shortages in a continental climate is no joke.
“They will spark riots and growing political instability.”
Mr Macleod blamed the war in Ukraine and high inflation for the issues.
EU fury as VDL hands Germany £4.3bn lifeline despite Putin reliance [REACTION]
Starmer mocked for ‘economy booster’ trip to Berlin [INSIGHT]
Olaz Scholz battles Germany’s ‘biggest crisis ever’ [REPORT]
He added: “The ECB, and the euro system of shareholder national central banks, has metaphorically been caught with their collective trousers down.
“Having suppressed interest rates into negative territory, they allowed member governments to borrow ultra-cheaply.”
He called on the European Central Bank to raise interest rates in order to prevent the euro from “crashing”.
Germany has found itself in a particularly vulnerable position during the war in Ukraine as a result of its reliance on Russian oil and gas.
The country depends on Russia for about 1/3rd of its total energy consumption.
But there is increasing pressure on the EU to impose an embargo on Russian gas and oil in response to its invasion of Ukraine.
The European Commission has so far pledged to cut its use of Russian gas by two-thirds by the end of 2022, with the longer-term goal of ending its reliance on Russian energy entirely by 2030.
Source: Read Full Article