Germany has reportedly drawn up a six-point plan to rescue Greece and the eurozone’s other failed economies in the same way East Germany was rebuilt after the fall of the Berlin Wall.
Chancellor Angela Merkel wants to revitalise the eurozone’s weaker countries with a package of privatisations, according to German weekly Der Spiegel.
This would be overseen by an agency modelled on the Treuhand or “trust agency” which sold off most of the East’s state-owned businesses.
Berlin also wants to relax employment laws to bring them in line with the German model and to set up special economic zones to lure investors with tax incentives and less red tape.
The proposals are likely to prove controversial with electorates who will be unwilling to be effectively told to follow a more German way of life.
The plans emerged as Germany dug its heels in deeper over the issue of eurobonds. Berlin is resisting the idea of pooling eurozone debt unless there is closer fiscal integration first.
“The pooling of debt is just one side of a coin where federalism is the other. Governments who are in favour (of eurobonds) fail to point this out,” said German central bank chief Jens Weidmann.
The comments came amid rumours – detailed by the bank of Tokyo Mitsubishi-UFJ – that a Greek exit is now imminent. The bank said there was speculation that a “planned departure” would take place over the weekend of June 2 and 3.
The left-wing party that opposes Greece’s austerity agreements has extended its lead ahead of next month’s election, according to a new poll.
If Greeks do vote for politicians who are against the cuts and reforms on which its bail-out packages depend, its international lenders are expected to cut off funding, prompting its eurozone exit.
The cost of this could exceed the €1 trillion (£800bn) previously estimated by the Institute of International Finance, said its managing director.
“Those who think that Europe, and more broadly the global economy, are really prepared for a Greek exit should think again,” said Charles Dallara.
The impact on the UK could be a drop of around 2pc in GDP, prompting the Bank of England to expand quantitative easing by £200bn to £525bn, said analysts at Bank of America Merrill Lynch.
telegraph.co.uk
Chancellor Angela Merkel wants to revitalise the eurozone’s weaker countries with a package of privatisations, according to German weekly Der Spiegel.
This would be overseen by an agency modelled on the Treuhand or “trust agency” which sold off most of the East’s state-owned businesses.
Berlin also wants to relax employment laws to bring them in line with the German model and to set up special economic zones to lure investors with tax incentives and less red tape.
The proposals are likely to prove controversial with electorates who will be unwilling to be effectively told to follow a more German way of life.
The plans emerged as Germany dug its heels in deeper over the issue of eurobonds. Berlin is resisting the idea of pooling eurozone debt unless there is closer fiscal integration first.
“The pooling of debt is just one side of a coin where federalism is the other. Governments who are in favour (of eurobonds) fail to point this out,” said German central bank chief Jens Weidmann.
The comments came amid rumours – detailed by the bank of Tokyo Mitsubishi-UFJ – that a Greek exit is now imminent. The bank said there was speculation that a “planned departure” would take place over the weekend of June 2 and 3.
The left-wing party that opposes Greece’s austerity agreements has extended its lead ahead of next month’s election, according to a new poll.
If Greeks do vote for politicians who are against the cuts and reforms on which its bail-out packages depend, its international lenders are expected to cut off funding, prompting its eurozone exit.
The cost of this could exceed the €1 trillion (£800bn) previously estimated by the Institute of International Finance, said its managing director.
“Those who think that Europe, and more broadly the global economy, are really prepared for a Greek exit should think again,” said Charles Dallara.
The impact on the UK could be a drop of around 2pc in GDP, prompting the Bank of England to expand quantitative easing by £200bn to £525bn, said analysts at Bank of America Merrill Lynch.
telegraph.co.uk
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