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Germany could cause euro collapse: Soros

Billionaire investor says the country is dragging its neighbours into deflation

Berlin — ReutersPublished on Wednesday, Jun. 23, 2010 6:51AM EDTLast updated on Wednesday, Jun. 23, 2010 7:46AM EDT
German’s budget savings policy risks destroying the European project and a collapse of the euro cannot be ruled out, billionaire investor George Soros said in a newspaper interview released on Wednesday.
“German policy is a danger for Europe, it could destroy the European project,” he told German weekly Die Zeit.mr. Soros, who earned $1-billion in 1992 by betting against the British pound, added that he “could not rule out a collapse of the euro.”
“If the Germans don’t change their policy, their exit from the currency union would be helpful for the rest of Europe,” he said.
Chancellor Angela Merkel unveiled plans earlier this month for €80-billion ($107-billion) in budget cuts over the next four years – a package she hopes will bring Germany’s structural deficit within European Union limits by 2013.“Right now the Germans are dragging their neighbours into deflation, which threatens a long phase of stagnation. And that leads to nationalism, social unrest and xenophobia. Democracy itself could be at risk,” Mr. Soros said.
“Germany is globally isolated ... Why don’t they let their salaries rise? That would help other EU states to pick up.”
Ms. Merkel on Monday defended her budget cut plans after U.S. President Barack Obama preached patience in clamping down on public spending. A German government official said on Tuesday Berlin did not expect to come under pressure at a G20 summit in Toronto this weekend to provide fresh stimulus measures.