Angela Merkel has been accused of allowing the eurozone to collapse after the German Chancellor rejected Emmanuel Macron’s demands for further financial integration. Angela Merkel has set off a backlash among the EU27 after she was accused of letting the eurozone crumble under the coronavirus pandemic. The German Chancellor was one of the few EU leaders who declined pleas from hard-hit countries like Italy and Spain for so-called corona-bonds that would help soften the economic blow of the pandemic. Economist Marcel Fratzscher, President of research institute DIW, warned that such a bold move risked the collapse of the entire eurozone.
Speaking on CNBC, the economist warned Germany would have to agree to further integration if Mrs Merkel wanted to save the eurozone.
However, her rejection of so-called corona-bonds may signal enough is enough for the German Chancellor.
The CNBC host told Mr Fratzscher: “Germany has been impatient with other nations, and the way they haven’t been as frugal as Germany and have been more spendthrift.
“Europe is at a financial halfway house. Does it go for more integration on the back of this on the fiscal front, or once the dust is settled does Germany pull away and say enough is enough, we cannot have more fiscal integration?”
The DIW President responded: “People have to be aware, particularly in Germany, that this would be rising the euro, the common currency.
“If a big economy like Italy becomes unable to finance public debt, this would challenge the euro.
“Germany is pro-European, it is pro-euro, and you have to think about the alternatives in other scenarios.
“If there is no willingness to support weaker countries currently more forcefully and a lot stronger, then you have to be aware that this will risk the euro and cause economic depression across Europe, including in Germany.
“It is a tough decision. Do you want the euro to recover? That means more funding for smaller nations and more integration. That is the choice.”
French President Emmanuel Macron led the charge for Brussels to issue joint European debt bonds to help eurozone economies cope with the impact of the coronavirus lockdown measures.
A total of nine EU member states, including Italy and Spain, made the desperate request.