Billionaire financier George Soros has said the European Union could split after the new coronavirus pandemic, unless the bloc issues perpetual bonds to help weak members like Italy.
The new coronavirus, which appeared in China last year, has paralyzed part of the global economy, while governments have increased loans to levels never seen in peacetime history.
Soros, 89, said the damage to the eurozone's economy from the new coronavirus would last "longer than most people think", adding that the rapid evolution of the virus meant that it would be difficult to develop a reliable vaccine.
The hedge fund veteran and president of the Soros Fund Management LLC said the perpetual bonds, used by the British to finance wars against Napoleon, would allow the EU – itself created from the ashes of World War II – to survive.
"If the EU cannot consider it now, it may not be able to survive the challenges it currently faces." Soros said in a transcript of a question and answer session emailed to reporters. "This is not a theoretical possibility; it could be the tragic reality."
Comments were approved by Soros for publication on Friday, said a spokesman.
Soros, which gained fame by betting against the pound in 1992, said that with major countries like Germany selling bonds with a negative yield, perpetual bonds would ease an impending budget crisis across the bloc.
He said the EU would have to maintain its "AAA" credit rating to issue that debt – and therefore be empowered to raise taxes to cover the cost of bonds – so he suggested that it could simply authorize taxes instead of taxes.
"There is a solution," he said Soros. "Taxes just need to be authorized; they don't need to be implemented."
Asked about Brexit, Soros he said he was particularly concerned about Italy: "What would Europe be left without Italy?"
"The relaxation of the state aid rules, which favor Germany, has been particularly unfair to Italy, which was already the sickest man in Europe and then the hardest hit by COVID-19". Soros said.
Soros he fled Hungary when the communists consolidated power in 1947 and ended up at the London School of Economics.
Its Quantum Fund made huge profits in 1992, betting that the pound sterling was overvalued against the Deutsche Mark, forcing the British to withdraw the pound from the European Exchange Rate Mechanism.
Reuters news agency