Any quotes used must be attributed to Murnaghan, Sky News
 

DERMOT MURNAGHAN:

Sky News has learned that members of the G20 group of nations are preparing behind the scenes for Greece to default on its debts.  The message therefore is unlikely to calm global stock markets which have plunged in recent weeks and months as the crisis surrounding the Eurozone has deepened.  Joining me now from Brussels is Guy Verhofstadt, former Prime Minister of Belgium, head of the Liberal group in the European Parliament, a man tipped as well to be successor to European President, Jose Manuel Barosso.  A very good morning to you, Mr Verhofstadt, is that the way you read the Greek situation now, that Greece is almost beyond redemption and some form of way of allowing it to default has to be found?

GUY VERHOFSTADT:

Well I think that we shall find a solution for Greece and that can maybe be a reorganisation I should say of their debt problem but we have to underline very clearly that this is not a Greek debt crisis what we are living today, it is a more structural, more fundamental crisis of the Eurozone because we have built in the past a monetary union and not an economic and a fiscal union at the same time and it is impossible to have a single currency on the one side and 17 different governments, 17 different bank markets and 17 different economic strategies on the other side and that’s the real origin of this crisis.

DERMOT MURNAGHAN:

So is that the way you would see the solution lying, closer integration in those areas you describe because others of course say well there is another way, either Greece and others could leave the euro or Germany could go it alone and leave the rest of them in the euro.

GUY VERHOFSTADT:

Yes, but I think that would be a very bad solution, if a country leaves the Eurozone that should create contagion in a number of other countries so if tomorrow for example the Greeks decide themselves the Eurozone or they Euro countries are pushing out Greece, that should be a very bad thing for the euro as such because that should create contagion to a number of other countries, Spain, Portugal, Italy and maybe other countries of Eurozone.  So I think there is only one way forward and that is to make an enormous jump forward in European integration and create the real economic union and fiscal union that we don’t have today and that means concretely that we should create an economic government for the Eurozone and an economic government with full powers also to implement the stability and the growth back and also to implement economic reforms in all the member states of the Eurozone.

DERMOT MURNAGHAN:

And implement, as we’ve seen with the Troika in Greece, implement really tough austerity programmes.  A lot of people argue, a lot of people are arguing in this country, I’ve just been talking to the former Chancellor of the Exchequer Alistair Darling, arguing that if you overdo the cuts, if you overdo the austerity, you affect growth and it gets to a situation where they’ll never flourish and there is no way out of the debt crisis.

GUY VERHOFSTADT:

That’s true.  We need austerity, certainly in Greece we need austerity but that’s not enough.  That’s only one of the two tracks that you need, the other track that we need is growth and growth you can only create if the European Union and the member states are pushing for investments increase.  Like for example not giving a part of the privatisation programme as collateral for new private investment, why not giving guarantees with the European Union to private investment in Greece?  So what Europe is doing for the moment, they are only talking about austerity and that is absolutely necessary but they are not capable for the moment, they have not shown a way forward to see at least a minimum of growth in that country.

DERMOT MURNAGHAN:

Would you like to see the United Kingdom doing more, not of course in the euro but a mighty economic power within Europe and indeed the world, and mentioning the former Chancellor, he took a lead during the banking crisis of 2008.  Is it doing enough now in your book in the Eurozone crisis?

GUY VERHOFSTADT:

I  have seen Mr Osborne for the first time has said that if the euro wants to be safe for the future, the Eurozone countries need to make a fiscal union so I think that was a very important statement from a leading politician from Great Britain is saying to the Eurozone leaders, okay, make your economic and fiscal union otherwise it cannot work.  Secondly I think that Great Britain, together with the other members of the European Union have to work urgently to solve the bank crisis because this bank crisis is not new.  We have a bank crisis in 2008 in Europe, with banks that are undercapitalised and the situation becomes more and more unstable because of all of this bad bounce that different banks in Europe kept in their balances.  So what we need is as fast as is possible a European solution to recapitalise the banks in Europe because it is the only way to get out of the crisis and to avoid a recession that is just before us.

DERMOT MURNAGHAN:

Mr Verhofstadt, many thanks.  Guy Verhofstadt there with his thoughts on the Eurozone crisis and the banking crisis.