EU Economics

Lord Owen: ‘Half-baked’ eurozone to end up as just FOUR ‘core’ countries & Italy must QUIT

THE AILING eurozone could shrink to just four ‘core’ countries while Italy needs to quit the “half-baked” currency union, former foreign secretary Lord David Owen has said.

Lord OwenGETTY

Lord Owen said Brexit could prompt much-needed eurozone reform

The independent peer, a leading Brexit supporter, described how Britain’s pending departure from the EU had finally made Brussels bosses “more likely” to consider “long overdue reform”.Lord Owen claimed now four months had passed since the historic Leave vote on June 23, the EU had “wisely” begun to view Brexit as more than “an event of little significance” and “a matter just for the British”.

In a keynote speech in Zurich, Switzerland, this afternoon, the veteran eurosceptic claimed much-needed changes to the debt-laden eurozone could be enacted soon after Britain’s exit.Lord Owen said the creation of a “core eurozone” will need to be “openly discussed” in order to avert the entire collapse of the Brussels single currency project.

He suggested Germany, the Netherlands, Belgium and Austria could form a quartet of countries to integrate their economies further by signing up to an initial fiscal and banking union.

But the former SDP leader expressed doubt about France’s involvement.

Lord Owen said: “Even if something dire happens to the eurozone these four countries will ensure that a small eurozone continues. The question is who will be their partners?

“As for France a lot will depend on the outcome of the French elections.  But for the first time, whereas it would have been automatic in the past that Germany would insist on French membership, there may not be the level of public support after the elections in Germany to include France initially.”

Even if something dire happens to the eurozone these four countries will ensure that a small eurozone continues.

Lord Owen

German chancellor Angela Merkel faces a battle to be re-elected in the country’s elections next Autumn.And Lord Owen suggested the potential success of far-right Front National leader Marine Le Pen in the French presidential election might alter the country’s attitude to European federalism.

He added: “Marine Le Pen, after campaigning to leave the eurozone as part of her presidential bid, may have considerably changed the nature of the debate in France on the Eurozone.”

The peer predicted the “reluctance of the French people to accept even European Commission disciplines” could prevent them from supporting a stricter ‘core’ eurozone.

Lord Owen said a range of other countries could look to join a ‘core’ group, although some could be blocked or face questions over their current tax haven status.

Amid fears of a banking crisis in the country, Lord Owen claimed “the best outcome would be if Italy voluntarily chose to leave the eurozone” and to lead a restructured European Economic Area (EEA).

He added other struggling economies such as Greece and Portugal “might follow”.

Lord Owen, who served as Labour foreign secretary under Jim Callaghan before quitting the party to co-found the SDP in 1981, outlined how a ‘core’ eurozone would “in effect” become a “federal Europe”.Although those countries in favour of a tightened single currency could not “throw a number of countries out of the eurozone” due to the delicacy of EU politics, Lord Owen suggested there could be an attempt to make weaker economies “ineligible” for a ‘core’ eurozone by installing strict criteria for a fiscal and banking union.

Lord Owen’s forecast of a eurozone overhaul came after a top banking expert warned Britain must quit the EU’s Single Market before the crisis-stricken euro blows up in another debt disaster.

Leading City analyst Bob Lyddon claimed “retaining a share in the cost of saving the euro from its inevitable decline will be the price Britain has to pay” if the Government negotiates to keep Single Market membership.

In a comment piece for the BrexitCentral website, he wrote: “The UK had a choice as to whether to remain embroiled with the euro, and to implement a continuing legislative programme whose aims are inextricably linked to the protection of the euro.

“We chose to get out. The euro is a disaster waiting to blow and the quicker we de-link the UK the better.”

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