Debt is the elephant in European Union’ s room

THE real ‘project fear’ orchestrated by the Remain camp should not be Brexit (if they look at the state of the eurozone), it should be the EU’s growing and unsustainable debt mountain, together with the EU 28’s forward fiscal debt.

Debt in the EU 28 is growing, not reducing, and where the EU banks have unsustainable debt, that will eventually default.

Global debt standing still, without including forward fiscal debt (money nations and people have to find and pay no matter what to satisfy off-balance sheet debt), was $233 trillion at the end of 2017 (a quarter of a quadrillion dollars and increased $16trn in nine months alone from January 2017, according to the Institute of International Finance). The EU 28’s take of that is estimated to be at least $60trn.

But the debt burden of forward fiscal deb’, which is the real problem for the EU, is estimated at more than $150trn.

The only comfort, if I can put it that way, is that some macroeconomists estimate that the USA’s total forward fiscal debt is in excess of $240trn.

According to the macroeconomist Professor Rodney Shakespeare, the EU is probably going to disintegrate. As that happens, bigger shocks are in store, such as Germany’s Deutsche Bank, with its huge derivatives book in the form of an upside-down pyramid.

He also states that, when this happens, the UK will at least be a little better prepared for those shocks (after the collapse of the global financial markets that unparalleled debt will eventually cause) than the other EU countries. Therefore, the greater threat is staying in the EU, not out of the EU.

People should start looking at the other side of the Brexit debate.

DR DAVID HILL By email

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