Billionaire investor says it is ‘inevitable’ weaker economies will exit euro

Published on June 28, 2011 by David Turner · No Comments

George Soros, the Hungarian-American financier, has stated that the financial collapse in Greece could lead to a meltdown of the euro and further problems for the smaller countries within Europe.

Speaking at a panel discussion on European liberal democracy yesterday, the wealthy investor suggested it was “inevitable” that certain countries will seek to leave the euro as the European economy as a whole becomes increasingly “vulnerable”.

Soros stated “There’s no arrangement for countries leaving the euro, which in current circumstances is probably inevitable. We are on the verge of an economic collapse which starts, let’s say, in Greece, but it could easily spread. The financial system remains extremely vulnerable”.

The euro was pushed to a record low against the Swiss franc last week and the fear is growing that the Greek crisis could have a destabilising effect on various other European countries. Soros was adamant in his view that the crisis is ‘centred’ around the euro. “It’s a kind of financial crisis that is really developing. Most people realise it. The authorities are actually engaged in buying time, “he said.

The fear is growing that countries such as Luxembourg and Estonia, where the euro is in place, are facing similar problems to Greece and are in danger of becoming the next big victim of the financial crisis which has already had a devastating impact on the Irish economy.

European Union leaders have made a pledge to stand behind Greece provided Prime Minister George Pandreou can push through a 78 billion euro package of budget cuts and asset sales. But Soros fears this isn’t enough and thinks that European leaders should be looking for alternative strategies to solve the debt crisis.

“You need a Plan B and there’s no Plan B at the moment”, Soros stated. He also suggested there were “fundamental flaws” that must be corrected to ensure a turnaround in the fortunes of the euro and the European economy in general. As Greece becomes the latest European nation to slide into financial crisis following Ireland and Portugal, the inevitable question is; who is next?