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.
I think that one day the European people will have a confederation
Jean-Claude Trichet, president of the European Central Bank
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.