The European Union faces an unprecedented economic collapse among several member-states due to the impact of the coronavirus lockdowns. This has sparked concern for UK financial analysts, who suggest that the EU could demand the UK bail out member-states if Boris Johnson agrees to a Brexit extension.The UK has come under huge pressure recently to agree an extension to the Brexit transition period due to the ongoing coronavirus crisis.
Despite this, Boris Johnson and his chief Brexit negotiator David Frost have repeatedly insisted that the UK will not ask the EU to extend the deadline, which ends on 31st December.
Speaking to Nigel Farage on Friday, City of London financial analyst and former Brexit Party MEP Jake Pugh said that the EU wants the UK to extend because of the country’s financial liabilities.
He revealed that the EU could demand the UK fund a £30bn bailout of bankrupt member-states if the eurozone collapses under the coronavirus strain.
The former MEP explained: “If the eurozone, or I should say when the eurozone goes bust in the net few years we are still on the hook for European Investment Bank loans.”
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Mr Pugh added: “The guarantees for those loans come from the member-states. If one of the members goes bust, everyone is on the hook.
“The size of the loan book means that at any point in the next 12 years, we could be called for over 30 billion euros in what is called callable capital.
“So any time in the next 12 years, the EIB could say we need that money and we would have to pay up.”
Nigel Farage explained that Brexit “needed to be at top of our minds” because of the exposure the UK has to a potential eurozone collapse.
He added: “There is enormous pressure on us not to be cleanly out by the end off this year.
“Overnight the boss of the IMF in Washington said there needs to be an extension. What the hell does it have to do with them?”
This comes as the EU struggles to stay united amid divisions over the pandemic response.
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Ahead of a crunch EU virtual summit next Thursday, French President Emmanuel Macron said: “We are at a moment of truth, which is to decide whether the European Union is a political project or just a market project.
“I think it’s a political project.”
Former Italian prime minister Enrico Letta also sounded the alarm, adding: “There is a mortal risk for the European Union and we have to act to avoid this mortal risk.
“I think the last chance is next Thursday, the European Council next week.”
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