| 12.6°C Dublin

Bruton warns of crash risks from eurozone ruling

FORMER Taoiseach John Bruton has warned that financial markets could crash this year if Germany's highest-ranking court does not support closer fiscal integration in the eurozone.

The former EU ambassador to Washington was speaking for the first time since he was named chairman-designate of IFSC Ireland, a new body set up to promote Ireland's financial services sector.

Mr Bruton's new position is funded by the industry and he is due to begin in September.

Several leading German academics plan a legal challenge to the recently agreed €750bn bailout package for countries such as Greece and also plan to challenge attempts to force national governments to approve budgets with the commission before presenting budgets to national parliaments.

The court's views could be damaging for the stability of the eurozone and "might take the financial markets by surprise".

He also said that measures such as the direct election of the president of the European Commission should be considered.

Directly electing a commission president would "create a similar level of democracy at European level to that we each enjoy at national level".

Mr Bruton was speaking at the annual lunch of the Federation of International Banks in Ireland.

"The present crisis is an opportunity not only to deal with long-hidden fiscal problems but to make the European Union even more democratic."

Mr Bruton went on to say that the loss of competitiveness against emerging economies was presenting a huge problem for Europe.

He warned that the present crisis is "no more than a symptom of a deeper problem".

"The problem is a loss in relative competitiveness of both Europe and North America vis-a-vis the emerging economies of China, India, Brazil and others over the past 20 years."

This loss of competitiveness was accompanied by a reluctance to face up to long-term problems such as ageing societies and what Mr Bruton called "the ephemeral nature of some of the innovations of the so-called new economy".

Easy credit had acted as "(an) anaesthetic that concealed that underlying loss in competitiveness from us until 2008," he added. Mr Bruton also criticised the European Commission over its handling of the recent Greek borrowing crisis.


Privacy