Change course Germany, or risk eurozone collapse

Philip Whyte of the CER told Channel 4 News: "Ultimately the hopes of the eurozone rest on the shoulders of the ECB. I'm in the Cameron/Sarkozy camp on that. If the ECB remains Germanic, the eurozone will break up. The ECB is the only institution that can do what is necessary, in the amounts available, to restore confidence in the eurozone."  Mr Whyte said: "The ECB has engaged in government bond purchasing, but has signalled its reluctance to do so. The financial markets have never believed the ECB is behind this. It has to persuade the financial markets that it's serious about this. It has to tell the markets that this is going to be unlimited." The ECB and Germany argue that its purpose is to control inflation, but Mr Whyte said it would be disastrous if the bank did not assume a bigger role. "The ECB is saying it's much more worried about its mandate than the future of the eurozone. It's been dragged into a role it doesn't want to carry out and the Germans don't want it to carry out. But the eurozone will fall apart." With the borrowing costs of countries like Holland, Austria and Finland rising, "the markets are signalling a total lack of confidence in the eurozone," according to Philip Whyte. Germany is also resisting a more muscular role for the ECB because it believes indebted countries would have less incentive to reform if they assumed they would be rescued. It is insisting that Greece and Italy, which are being run by unelected technocrats, continue cutting spending and increasing taxes to balance their budgets, despite the public protests against these austerity measures. ...Mr Whyte said: "Germany is a reluctant leader, but a self-righteous reluctant leader. It doesn't quite understand what political and economic damage the adjustments they are seeking are having for others, weakening democracy in Greece and Italy. "I sometimes wonder whether Germany is aware of the external consequences of the policies it is prescribing.The attempt to turn the eurozone into a larger version of Germany is turning the eurozone into a depression." ...Germany has floated the idea of the tax being adopted by the 17 members of the eurozone, rather than all 27 members of the EU. But Mr Whyte said Britain would still be affected. "It could hit the City if transactions between institutions in London and the eurozone are subject to the tax, which presumably they would be. A lot of European politicians think the City is a threat to stability and the future of the eurozone. I think the motive for the tax isn't as pure as French and German politicians like to imply. It would affect the UK disproportionately and is not the answer to what is ailing the eurozone." ...Mr Whyte said it was understandable other EU countries were irritated by these demands at a time the eurozone was in turmoil. "I would say this is an area where European politicians have most reason to gripe. It is seen as an incredibly hostile act at a time the eurozone is going through an existential crisis. Backbenchers in the Tory party are clamouring to hold any treaty changes to ransom."