George Soros Warns of 25-year Economic Slump in Europe
Europe could follow Japan in suffering up to 25 years of economic stagnation unless the region’s politicians pursue further integration of the currency bloc and change policies that have discouraged banks from lending, according to the billionaire investor George Soros.
In an interview with
Bloomberg Television
, Soros said that although the European Union (EU) is emerging from the deep financial crisis with which it has struggled since 2010 it must still deal with a political crisis that has divided the region between creditor and debtor nations. At the same time, banks have been encouraged to pass stress tests, rather than boost the economy by providing capital to businesses, he said.
Europe “may not survive 25 years of stagnation,” Soros told interviewer Francine Lacqua. “You have to go further with the integration. You have to solve the banking problem, because Europe is lagging behind the rest of the world in sorting out its banks.”
Soros has constantly criticised the design of the EU currency bloc and also the budget cuts imposed on indebted nations such as Greece and Spain during the sovereign debt crisis. He said more radical policies are required to avoid a ‘long period’ of stagnation.
Soros also said the crisis in the Ukraine should serve as a ‘wake-up call’ for Europe and suggested that the country’s recent political turmoil stems in part from the same problems that triggered Europe’s financial crisis.
The EU required ‘too much’ of Ukraine and offered ‘too little’ as the country attempted to join the political bloc, he added. Russian president Vladimir Putin had been able to fill the void and gain power in Ukraine as a result.
“Europe needs to rediscover its own European identity, instead of each country just pursuing its own national interests and getting further into conflict with the others,” Soros said, adding that he hopes “Europe passes this test” in Ukraine.
The interview also touched on the possible UK referendum on leaving the EU, which Soros said would be ‘disastrous’ as it would cost the country jobs. The country’s growth had come largely from multinational companies selling goods and services to Europe, so it would be ‘suicidal’ if the UK quit Europe.