Frexit: Expert fires warning about leaving euro
Brexit was completed at the end of last year when the UK finally cut all ties with the European Union, ending 47 years of membership and freeing it from Brussels’ rules on the Single Market and Customs Union, which it has been tied to under the agreed transition period. Prime Minister Boris Johnson has embraced the Britain’s new-found freedoms and sovereignty, shutting down Project Fear and insisting the country will flourish outside the EU. But Brexit and several cases of in-fighting from within the EU and its member states has led to calls for more countries, including France, to leave the bloc, piling pressure on under-fire President Emmanuel Macron.
Marc Touati, president of ACDEFI, an independent economic and financial consulting firm serving businesses, professionals and individuals, has now claimed there could be catastrophic consequences if the euro were to disappear.
In an article for French economic website Capital, he wrote: “The probability of an explosion in the eurozone is increasing day by day.
“And this, not only because of the multiple errors of economic policies of our leaders, but also because of the inability of the European Union in the broad sense and of the euro area in particular to manage the health crisis effectively, in particular in matters of vaccination.
“So much so that the Economic and Monetary Union risks being the last part of the world to emerge from the pandemic.
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“Faced with such failures, we must therefore recognise that the eurozone itself is indeed in danger.
“Rather than taking refuge in denial and rejecting this possibility, as too many European leaders and citizens do, it would be much more appropriate to accept this extreme case and to think about the disastrous consequences that it could entail, so as to understand what to do to avoid it. This is what we propose to do.
Mr Touati warned if France were to leave the Economic and Monetary Union (EMU), interest rates would soar that would trigger a massive collapse in investment and consumption, which would consequently be followed by a recession.
He said: “If France left EMU, the interest rates at which it borrows would also soar, certainly reaching 8-10 percent for the ten-year rate.
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EU news: Marc Touati warned there could be disastrous consequences if the euro were to collapse
“Beyond the worsening deficit and debt that this would engender, this dramatic tension would trigger a collapse in investment and consumption, followed by a recession, which, in turn, would result in a further increase in the public deficit, so a rise in interest rates and the pernicious circle would continue.
“In an attempt to stop the bleeding, the government would then have no choice but to re-establish exchange controls and drastically increase customs duties.
“In other words, the French could not get their money out of France without authorisation from the Banque de France.
“The Banque de France could also activate the printing press and monetise the public debt. The problem with this scenario, which might seem idyllic to some, is that France’s credibility would come out particularly weakened on the international scene.
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In addition, by creating money without the creation of corresponding wealth, inflation would soar to eight percent, which would further hamper the lack of purchasing power of the French and worsen the recession.
“As for the excessive taxation of assets and businesses, it would result in a further collapse of investment and consumption, and therefore an exacerbation of the recession, with all the dramatic social consequences that this would bring.
“Already ‘on edge’, the underprivileged populations would become uncontrollable, which would end up causing riots, even a civil war.”
Mr Touati ended his article by warning: “If the exit from the euro area is quite possible, it should be known that it would necessarily result in a worsened and lasting recession, in an unprecedented social crisis, but also civil wars, even a military conflict.
“In short, Europe and the world would enter a ‘black hole’.
“History has shown us that when a revolution begins in France, it can last a long time and end very badly.
“Obviously, the game is really not worth the effort. In other words, despite knowing that the way Europe works must be completely changed, including replacing dogmatism and technocracy with common sense and pragmatism, the euro area must be saved.”
But the defence of the euro sparked a furious response from Frexit campaigner and MEP Florian Philippot, who tweeted: “They are forced to say there will be an “unprecedented social crisis, civil war and military conflict” in the event of Frexit!
“They have forgot about nuclear war!
“Their propaganda is increasing because they know Frexit is coming!”
Speaking to Express.co.uk last week, fellow Frexit campaigner Charles-Henri Gallois increased calls for France to leave the EU, branding Brussels a laughing stock among many countries over its chaotic Covid vaccine rollout, with the disaster tearing apart the bloc’s “stronger together” message.
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The Generation Generation President said: “I think that it’s more embarrassing for the pro-EU. All the propaganda of ‘Stronger together’ is falling apart.
“This crisis highlights an obvious fact for a Frexiteer like me: the independence, agility and resourcefulness of sovereign nation states like the UK have outshone the lumbering bureaucracy of the EU at every stage.”
The Frexiteer concluded: “One day of COVID-19 costs us three billion euros per week.
“It has been calculated that the vaccination delay will cost 123 billion euros for the EU country.
“When the French will pay the bill, I think that the EU will pay the price and Frexit will rise.”
Additional reporting by Maria Ortega.