George Soros has urged Germany to "lead or leave the euro" just days before a key ruling on the eurozone's bailout fund by Germany's constitutional court.
George Soros has urged Germany to “lead or leave the euro” just days before a key ruling on the eurozone’s bailout fund by Germany’s constitutional court.
He said the eurozone should target 5% economic growth, which would require the bloc to dump German-backed austerity measures and accept higher inflation, the BBC reports.
In an article published in the New York Review of Books, Soros (pictured) said Germany should become a more “benevolent” leading country or exit the single currency: “Either alternative would be better than to persist on the current course.”
He also backed a new European Fiscal Authority, financed by VAT receipts, to oversee eurozone finances.
His comments come as Germany’s constitutional court is set to rule on whether the government’s backing for the new ESM bailout fund is legal or not.The challenge has already delayed implementation of the plan.
However, Soros said the scheme to reduce pressure on indebted nations such as Spain and Italy could deepen divisions within the eurozone.
“The debtor countries will have to submit to supervision by the Troika but the creditors will not… and the divergence in economic performance will be reinforced.”
Soros warned the prospects of prolonged depression and a two-tier Europe would “eventually destroy the European Union”.
He even favours a German exit instead of a departure by Greece and weaker economies.
“A German exit would be a disruptive but manageable one-time event, instead of the chaotic and protracted domino effect of one debtor country after another being forced out of the euro by speculation and capital flight.”
This article was first published on Investment Week