Greece should not have joined the Eurozone says Portillo
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Meanwhile Professor Daniel Hodson fears with the European Union determined to press ahead “federal project”, there will be no winners in the face of what he called a “looming Eurozone debt crisis”. The bloc is poised to remove the last obstacles for Croatia adopting the euro, paving the way for the first expansion of the Eurozone in seven years.
Finance ministers are today due to approve three laws which will enable Croatia to become the monetary union’s 20th member state. The last EU country to sign up was Lithuania in 2015.
Mr Habib, who got a close look at how Brussels operates during his brief but eventful spell as a Brexit Party MEP in 2019, said: “Croatia is making a big mistake. In the pursuit of lower borrowing costs at this time of global economic difficulties, it is sacrificing its sovereignty by joining the Euro.
“Yes, monetary union is overtly an economic tool, but its ultimate end is political union.
“By joining the euro, it is ceding control of one major component of governance, through which the EU will drive its political agenda. We have seen this across the Eurozone.”
Even economically, the euro was “no panacea”, said Mr Habib, who is the chief executive of commercial property investment and fund management company.
He explained: “It may reduce borrowing costs short term but ultimately it is the people of Croatia that will suffer for that lower cost of borrowing.
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“Next time there is an economic setback, they will not be able to deflate their currency to rebalance themselves. Instead, they will have to deflate their economy with all the attendant unemployment, reduction in standards of living and possibly even civil strife.
“We saw how this worked in Spain, Italy, Greece and Slovakia, to name a few, in the 2008 credit crunch. Greece was perhaps the worst and came very close to widespread civil disobedience.”
Mr Habib concluded: “To join the euro seems particularly odd for Croatia given the enormous sacrifices it made to gain its independence from Yugoslavia. I hope they will not come to rue this day.”
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Prof Hodson, chairman of the CityUnited Project, the deputy chairman of the Campaign for an Independent Britain (CIBUK) and the former director of Vote Leave, said: “It is typical of the EU to wish to press on with its Eurozone-based federal project, regardless of consequences.
“But there will be no winners in the short term as international currency markets are clearly stating.
“Another member cannot defray the risks of a looming Eurozone debt crisis, and the Croatian people will surely suffer even greater inflation as a result of this ill-timed move.“
The European Council last month backed Croatia’s entry on January 1, 2023.
Andrej Plenkovic, the country’s Prime Minister, tweeted: “Today, at the European Council, Croatia received support from the highest political level for membership in the eurozone.
“On January 1, we will achieve the Croatian government’s strategic goal of joining the eurozone.
“The benefits of membership will be felt by Croatian citizens and the economy, which will be even more resilient to crises.”
European Council President Charles Michel added: “The euro is a monetary expression of our common destiny and part of our European dream. Today, Croatia’s dream has come true.”
As of today (Tuesday) the euro was trading at near parity with the US dollar – its worst level in two decades.
Britain never opted to join the euro, despite being a member of the EU.
Former Labour Prime Minister Gordon Brown is generally credited with preventing the UK from signing up while he was Chancellor, arguing five key criteria had not been met, making membership economically unviable.
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