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Rich northern EU states like Germany and France could make unpopular orders to poorer southern states like Italy and Spain, according to Brexit author and financier Barnabas Reynolds. The expert spoke to Express.co.uk about the economic bloc’s 750 billion euro recovery package to help those hardest hit by the coronavirus pandemic. Mr Reynolds was adamant that the crisis could spell trouble for the concept of the European Union as a whole.
He said: “One possibility is that the north, basically Germany and France, say, ‘no, that’s enough, you guys need to make adjustments in your lifestyles’ and so on.
“This would be for the south to reflect their own financial situations.
“So you’d leave individual states financing themselves completely, which has been where we are hitherto apart from this recovery package.
“That’s another direction of travel for the EU but I don’t think that’s sustainable.”
Mr Reynolds continued: “The southern states are going to have to either default on their debts or come out of the euro.
“They need to do something in order to maintain the expectations of their citizens’ as to their standard of living.
“So we’re witnessing a hugely important moment historically in terms of whether to complete the euro project and how.
“There are massive financial consequences for the north if one goes down the road of sharing.”
The expert added: “There are massive financial and political consequences for the south if that is only done in a half-hearted way.
“That is where we are and have been at the moment.
“Part of the issue is the lack of democratic buy-in into the whole EU concept.”
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The EU confirmed on July 22 that they had agreed on their 750 billion euro recovery package to help those hardest hit by the coronavirus pandemic.
The plan was majorly altered due to debt fears from the so-called frugal four (Austria, The Netherlands, Sweden and Denmark).
This resulted in a cap on their overall contributions to the EU budget.
The significant increase in rebates is what is being used to cap the frugal four’s overall contributions.
French President Emmanuel Macron hailed the final package as “a historic change of our Europe and eurozone”.
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