George Soros says coronavirus may spell the end of the EU and Brussels may have to directly tax citizens
- George Soros believes perpetual bonds could keep EU afloat during pandemic
- Perpetual bonds are bonds that can’t be redeemed but provide regular payments
- To fund these bonds, EU may need to directly tax citizens of its member states
- Here’s how to help people impacted by Covid-19
Billionaire financier George Soros said the European Union could be forced to directly tax its citizens as the bloc faces collapse due to the coronavirus pandemic.
Covid-19 has wreaked havoc across the continent and stalled swathes of the global economy with governments forced to ramp up borrowing to levels not seen in peacetime history.
Mr Soros, 89, believes perpetual bonds – bonds that cannot be redeemed but provide continuous interest payments to investors – could keep the EU afloat.
But to fund these bonds, the EU may need to directly tax the citizens of its member states.
Billionaire financier George Soros (pictured) said the European Union could be forced to directly tax its citizens as the bloc faces collapse due to the coronavirus pandemic
Covid-19 has wreaked havoc across the continent with Italy one of the worst hit countries (a Naples street being disinfected by army officials)
In a transcript of a question-and-answer session emailed to reporters, Mr Soros said the damage to the euro zone economy from the new coronavirus would last ‘longer than most people think’.
He added that the rapid evolution of the virus meant that a reliable vaccine would be hard to develop.
In a transcript of a question-and-answer session emailed to reporters, Mr Soros (pictured) said the damage to the euro zone economy from the new coronavirus would last ‘longer than most people think’
The hedge-fund veteran and chairman of Soros Fund Management LLC said perpetual bonds – used by the British to finance wars against Napoleon – would allow the European Union to survive.
‘If the EU is unable to consider it now, it may not be able to survive the challenges it currently confronts,’ Soros said.
‘This is not a theoretical possibility; it may be the tragic reality.’
Soros, who earned fame by betting against the pound in 1992, said that with major countries such as Germany selling bonds with a negative yield, perpetual bonds would ease a looming budget crunch across the bloc.
He said the EU would have to maintain its ‘AAA’ credit rating to issue such debt – and thus have to have tax-raising powers to cover the cost of the bonds – so suggested it could simply authorise the taxes rather than imposing them.
‘There is a solution,’ said Soros. ‘The taxes only have to be authorized; they don’t need to be implemented.’
Asked about Brexit, Soros said he was particularly worried about Italy: ‘What would be left of Europe without Italy?’
Asked about Brexit, Soros said he was particularly worried about Italy: ‘What would be left of Europe without Italy?’ Pictured: A visitor wearing a protective mask is pictured inside Galleria Borghese after it reopened to the public with social distancing and hygiene measures in place
He added that the rapid evolution of the virus meant that a reliable vaccine would be hard to develop. Pictured: Visitors wearing protective masks look at a statue inside Galleria Borghese
‘The relaxation of state aid rules, which favour Germany, has been particularly unfair to Italy, which was already the sick man of Europe and then the hardest hit by COVID-19,’ Soros said.
Soros fled Hungary when the communists consolidated power in 1947. He studied at the London School of Economics.
His Quantum Fund made huge profits in 1992 betting that sterling was overvalued against the Deutsche Mark, forcing the British to pull the pound out of the European Exchange Rate Mechanism.