Thursday, 8 Jun 2023

EU on brink: How Germany fears ‘euro may crash’ as bloc cracks post-Brexit

The currency has been plagued by economic crisis since 2009, as countries such as Greece, Portugal, Ireland, Spain and Cyprus have been unable to repay debts without the assistance of other countries, the European Central Bank, or the International Monetary Fund. This has put strain on the stronger economies in the EU, such as Germany, France and the UK. But now that Britain has finally left the bloc, it appears many in Germany worry for the future of the currency as southern Europe continues to struggle with its national debts.

A spokesman for the Werte Union – a group within Chancellor Merkel’s party which has been critical of her leadership – said that the euro and the EU could fall apart in the near future.

He said: “The general population are angry about Brexit and disappointed about it – it isn’t just to do with regulation or economics but many people fear that the idea of the European Union is broken.

“They also fear that maybe it will break apart.

“We tend to look more at the internal policies in Germany, but what we have spoken about is that maybe there will be a euro crash and that the EU will fail.

“It really depends on how the EU will further develop. There’s a lot of debt in Italy and other states of the euro, also in the banks who bought government bonds from these countries and now have a high risk.

“The UK, if the EU crashes and burns with the euro, the UK will sit there with a smiling face and say ‘lucky we left’.”

The EU’s richer nations are feuding with the rest of the 27 member states over budget plans as the bloc aims to fill the loss of UK contributions.

The first European Council on 2021-2027 budget was a failure after lengthy talks ultimately ended with little progress.

Big differences remain between the frugal nations such as the Netherlands, Austria, Denmark and Sweden who don’t want to spend more than one percent of gross national income, and the group of 17 countries opposing cuts to agriculture.

Chancellor Merkel called for compromise in the talks, also saying she is willing to increase her country’s contribution to the budget to more than one percent if the other member states agree.

Her spokesman said: “Our goal has always been that this budget will also support a process of modernisation.”

He added that to achieve this, it “will require a willingness from all sides to compromise”.

Felix Schoenherr of the Werte Union highlights how Brexit could also lead to more strain on Germany in the EU budget.

He said: “One problem from a German perspective is of course money because the UK contributed quite a lot to the EU, money which now breaks away.

“Of course, politicians now ask ‘who is going to step in for that?’ And it’s the Germans again.

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“The Werte Union demands that the funding introduced for the EU is reduced – but we don’t want to abolish the EU.”

As for trade talks between Prime Minister Boris Johnson and Chief Negotiator Michel Barnier – Mr Schoenherr believes a deal is in everyone’s interests.

He said: “The question whether the UK will succeed or fail, it is always in relation to the EU. So we are worried the EU may go a long way without so much concern for the UK.

“What we acknowledge of course is that we support basic democracy. It was a referendum, the people decided. There is nothing to argue about.

“I think from a German economic perspective the UK is a very important trade partner, and we should try to get an agreement on both sides.”

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