Doesn’t add up! Desperate EU power grab plot for ‘weak’ Eurozone set to backfire – experts

EU at ‘crunch point’ over future of the Eurozone says expert

When you subscribe we will use the information you provide to send you these newsletters. Sometimes they’ll include recommendations for other related newsletters or services we offer. Our Privacy Notice explains more about how we use your data, and your rights. You can unsubscribe at any time.

Mr Draghi, the former President of the European Central Bank (ECB), today said the protracted economic uncertainty due to the COVID-19 pandemic meant the case for monetary and fiscal expansion remained compelling. Speaking at an economic forum in Barcelona, Mr Draghi, who leads a national unity administration in Italy, told an economic forum in Barcelona that the aim should be to bring economic activity back to “at least” the trajectory it had before the pandemic.

He said: “With higher levels of activity than before, we can compensate for the rise in debt that took place during the health crisis.”

Mr Draghi stressed that investors needed to be reassured that fiscal prudence will return “as soon as the recovery is self-sustained”.

However, UK-based experts were deeply sceptical about his motives – as well as  the long-term feasibility of the project.

Barney Reynolds, a partner at top City law firm Shearman & Sterling, told Express.co.uk: “It looks like he wants the ECB to buy more member state debt, and potentially for the EU to issue more Covid bonds, in order to help the southern EU to start expanding, with a view to it then being able to repay its debts.

“The theory is correct, but experience would indicate that the numbers may not add up, even then, and the ongoing problem of the increasing debt build-up will continue.”

Mr Reynolds added: “At root this is a massive political problem for the Eurozone, requiring ultimately the north to share its spoils more fully with the south.

JUST IN: EU vaccine exposed – blocked AstraZeneca – backed failing German jab

“He’s presuming Italy can grow like Bavaria through fiscal stimulus, whereas there’s no sign of that happening given the fact that the Euro is overvalued for Italy.”

David Jones, the Tory MP for Clwyd West as well as the deputy chairman of the European Research Group said Mr Draghi’s remarks were “very telling”.

Referring to a monetary policy whereby a central bank purchases longer-term securities from the open market in order to increase the money supply Mr Jones told Express.co.uk: “The bloc is struggling to achieve sufficient levels of economic activity so is maintaining quantitative easing.

“The UK by contrast is recovering quickly. Quantitative easing is all well and good when economic conditions demand, but its continuation underlines the structural weaknesses in the Eurozone.”

The situation in which the eurozone currently found itself was the result of the weakness at its very heart, Mr Jones said, namely the divide between the wealthier countries in the north and the poorer ones in the south.

He explained: “That was always the problem. It was one that could be disguised during benevolent economic conditions, but those are long since passed.”

Leigh Evans, editor-in-chief of the pro-Brexit think tank Facts4EU, added: “The EU spends a lot of time talking about its values, democracy, the ‘rule of law’, etc.

“Isn’t it interesting that Mario Draghi wasn’t only not an elected politician when he was appointed as Prime Minister of Italy, he has a background as a global banker working for Goldman Sachs and was then appointed as President of the European Central Bank.

“The Italian people have an unelected global banker as their Prime Minister, which seems to be just the way the EU wants it.”

Mr Draghi’s remarks come on the same day the Confederation of British Industries (CBI) predicted UK GDP will grow by 8.2 percent this year, almost double the eurozone’s figure of 4.2 percent, and well above Germany’s figure – 3.4 percent.

CBI economist Alpesh Paleja said: “We have substantially upgraded our forecasts for UK growth – it is a testament to the success of the vaccine rollout.

“We see much stronger growth in the UK than in the major eurozone economies.

“They also do recover over the course of this year and next, but the UK is very much ahead.

“A lot of it comes down to the improvement in health outcomes.

Source: Read Full Article