There is division in the EU over the bloc’s approach to the economic challenges posed by the coronavirus pandemic. European Central Bank President Christine Lagarde announced a huge bond-buying programme this week worth £680billion as she looked to stimulate the European economy. But German banks are worried about the issue amid growing concerns that they will have to bailout other European countries. Economist Julian Jessop argues that the EU is preventing individual states from finding an appropriate economic solution to the coronavirus crisis.
He also claims the pandemic has highlighted fundamental flaws in the bloc’s philosophy.
He said: “The sticking plasters being applied to Europe are the various EU institutions, but fundamentally the flaws are there for all to see.
“This is a crisis where there is some scope to do things better through coordination but basically something that individual sovereign states are best placed to cope with.
“The fact countries have their hands tied through EU membership one way or another – through border controls of monetary policy or whatever – these problems are just being underlined again.”
Mr Jessop argued that the situation also highlights the advantages the UK may gain from Brexit while Germany grapples with countries in Southern Europe.
He added: “I think this has underlined the advantages of being a sovereign nation state rather than relying on collective action.
“The UK has been able to move quickly on fiscal and monetary policy because we are outside the euro, and I think that has clearly been proven to be a good thing.”
He also took aim at the eurozone, stating that he has been predicting it will crash for years.
Mr Jessop believes a single currency cannot work without complete alignment on areas such as fiscal and monetary policy.
The economist continued: “If the eurozone as a whole is providing a lot of support for an individual country, that means Germany is effectively bailing out Italy, which is great if you are Italian but not if you are German.
“That has always been the problem. If you have a single currency and a single monetary policy, that is only sustainable if you have got a single fiscal policy and banking policy and other things.
“You are either all in or all out. The direction of travel is either that the euro breaks apart or that there is much more closer integration amongst eurozone members.
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“This would include common fiscal policies and effectively common governance which is why I think it is good that we are out of it.”
However, while Mr Jessop believes the eurozone is flawed, he also argues that leaders in Europe have the “political will” to ensure the currency bloc doesn’t split.
He said: “I have been predicting the collapse of the euro for years and it still hasn’t happened, so I wouldn’t underestimate the political will to keep it together, even if economically it makes no sense at all.
“I think they will probably find some way of keeping it together and patching over the cracks, but fundamentally it is a very weak system economically and politically.
“It wouldn’t surprise me if at some point it falls apart [but] in this particular circumstance they will pull out all the stops again to prevent this from happening.”
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