|A FEDERAL EUROPE IS NOW 'INEVITABLE’
| September 6,2011
ALL the eurozone nations will be forced into a single federal government to avoid future economic meltdowns, Europe’s finance chief said yesterday.
Jean-Claude Trichet, president of the European Central Bank, predicted that Germany, France and the 15 other single currency nations will have little choice but to merge into a single political unit.
“I think that one day the European people will have a confederation,” Trichet told a conference in Paris.
“If a country doesn’t take or is incapable of taking the required decisions, it should be possible to take them from the centre of the single currency.
“One can imagine a federal government.”
In chilling news, he also warned that the eurozone’s economic crisis is deepening.
His remarks will fuel talk that the EU is splitting in two, with a unified eurozone and an outer track including non-euro countries like Britain.
Investors across Europe were spooked yesterday by a combination of fears over the state of the global economy and Europe's debt crisis, sending stock markets plunging by up to 4%.
They recovered some ground in early trading today, but soon fell again with only London's FTSE 100 closing in positive territory - as bargain hunters sought value in depressed UK stocks.
The FTSE closed up 1.15% at 5,161.43, but the mood was more downbeat on the continent. The Dax in Frankfurt closed down 0.9% at 5,199.09 and the Cac 40 in Paris was down 0.96% at 2970.76.
Analysts say share prices across Europe will continue to be turbulent in the coming days as investors fret further over the debts of Greece and Italy.
Thursday's monthly interest rate decision from the European Central Bank and the subsequent press conference from Mr Trichet will also be closely monitored.