EU at ‘crunch point’ over future of eurozone as recovery fund could spark huge ‘decision’

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The European Union has reached “crunch point” on the future of the eurozone, 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 stressed the “no-strings-attached grants” were needed by southern countries to “keep the show on the road”.

He told Express.co.uk: “There is a fork in the road that the eurozone and EU have to face.

“COVID has accelerated the moment in time from what might have been five, ten, twenty years to right now.

“It’s creating economic effects which require immediate action and attention.

“It’s clear what the thinking is in the frugal four.”

Mr Reynolds continued: “Germany itself has indicated it’s not keen to engage in cross-subsidies.

“Having said that, in the south, they regard it as the completing of the bargain for having joined the eurozone in the first place.

“The zone is a massively beneficial market for the north, from which the north disproportionately benefits.

“The north now needs to share those proceeds with the south, is how they see it.”

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The author added: “The crunch point arises because there needs to be a decision as to whether to engage in genuine sharing.

“There’s a small element of it in the package which involves grants, rather than debts being created.

“There needs to be no-strings-attached grants to keep the show on the road in the south.”

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Mr Reynolds also said: “There is a decision to be made about whether they expand the number, in terms of grants.

“There are people in the northern eurozone that recognise that’s likely, and that this is just a first step and that things will continue along these lines.”

The recovery package plan was majorly altered due to debt fears from the so-called frugal four (Austria, The Netherlands, Sweden and Denmark).

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