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The billionaire investor was an outspoken supporter of Brexit and fears other member states such as Italy might soon be stepping up to follow suit. When asked about Brexit, Mr Soros said: “There is no point crying over spilled milk. But the question of how to prevent other countries from following the UK is an important one.”
Italians trusted Europe more than their own governments, and with good reason
He continued: “I am particularly concerned about Italy. Matteo Salvini, the leader of the Lega party, is agitating for the country to leave the euro and the EU.
“Fortunately, his personal popularity has declined since he left the government, but his advocacy is gaining momentum.
“What would be left of Europe without Italy? Italy used to be the most pro-European country.”
But he said splits began to appear when Brussels failed to offer adequate support to Rome at the height of the Meditrannean migrant crisis and then gave it a slap in the face by relaxing state aid rules to the benefit of richer nations such as Germany.
The EU response to the coronavirus pandemic has been the final straw for many Italian voters who see their country being punished by Brussels for a crisis that was not its fault.
Mr Soros said: “Italians trusted Europe more than their own governments, and with good reason.
“But they were badly treated during the refugee crisis of 2015. The EU enforced the so-called Dublin Regulations that put all the burden on the countries where refugees first landed and did not offer any financial burden sharing.
“That is when Italians decide to vote for Salvini’s Lega and the Five Star Movement in a landslide.
“More recently, the relaxation of state aid rules, which favour Germany, has been particularly unfair to Italy, which was already the sick man of Europe and then the hardest hit by COVID-19.”
Mr Soros warned the EU might not survive the economic impact of the coronavirus crisis unless it could issue perpetual bonds or “consols” to help weak members such as Italy.
He said: “If the EU is unable to consider it now, it may not be able to survive the challenges it currently confronts.
“This is not a theoretical possibility. It may be the tragic reality.”
Mr Soros said the EU would have to maintain its AAA credit rating to issue such debt – and thus have to have tax raising powers to cover the cost of the bonds – so suggested it could simply authorise the taxes rather than imposing them.
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Mr Soros, who earned fame by betting against the pound in 1992, said: “There is a solution. The taxes only have to be authorised; they don’t need to be implemented.”
Perpetual bonds or consols were used first by the UK to fund the Napoleonic wars.
As its name suggests, the principal amount of a perpetual bond never has to be repaid, only the annual interest payments are due.
So a €1 trillion bond would cost €5 billion a year, assuming an interest rate of 0.5 percent.
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