By Simon Miller

The euro currency could destroy the political unity of Europe claimed veteran investor George Soros at a press lunch today.

Speaking to reporters at the World Economic Forum in Davos today, Soros said Germany had taken on the role of the taskmaster rather than the International Monetary Fund imposing fiscal discipline.

As a result this could “generate both economic and political tensions that could destroy the political union,” he said.

Soros added: “"There is a real danger that the euro will undermine the political cohesion of the European Union."

He added that although the measures introduced by the European Central bank had relieved the liquidity problems of European banks, they “did not cure the financing disadvantage from which the highly indebted member states suffer”.

Soros continued: "Half a solution is not enough. It leaves the weaker members of the eurozone relegated to the status of third world countries that become highly indebted in a foreign currency.”

He added that even if the European authorities had not deliberate prolonged the crisis atmosphere in order to maintain the pressure on the embattled peripheral countries not been driven to this by divergent views that could not be reconciled, German was dictating policy because “at times of crisis, the creditors are in the driver’s seat”.

Soros concluded: “The trouble is that the austerity that Germany wants to impose will push Europe into a deflationary debt spiral.”

Home     More News

Financial Risks Today Beta Banner

Other stories you may find of interest:

Barroso sets out roadmap to restore confidence
The European Commission has set out a "roadmap" to restore global confidence in the region.

MMFs find concentration of risks
Euro and sterling denominated European money market funds have a concentration of risk according to a note from Fitch Ratings.

Ratings watch euro-countries need €1trn in debt sales
More than half the debt needed to be borrowed in the eurozone in 2012 will be from countries facing rating downgrades according to Fitch Ratings.

This website is a part of Perspective Publishing Limited, registered in England No 2876166.