Euro 'could fail', says man tipped as US ambassador to EU

Media playback is unsupported on your device
Media captionProfessor Ted Malloch is gloomy about the euro's future

The man tipped to be Donald Trump's ambassador to the European Union has told the BBC the single currency "could collapse" in the next 18 months.

Professor Ted Malloch said he would "short the euro" - taking a market position which bets on the value of the currency falling.

He also said Britain could agree a "mutually beneficial" free trade deal with America in as little as 90 days.

And that it was best for the US if Britain executed a "clean" Brexit.

Once outside the single market and the customs union, the UK could bypass "the bureaucrats in Brussels" and forge a free trade deal, he said.

Mr Malloch added that any attempt by the EU to block Britain beginning negotiations with the US would be "absurd" and like a husband "trying to stop his wife having an affair".

'Right energy'

Theresa May will be the first foreign leader to meet the new president when she arrives in Washington at the end of the week.

The possibility of an early trade deal with America, once the UK has left the EU, will be on the agenda.

"I remind people that the largest merger and acquisition deals in history are often done in about that time frame [90 days]," Mr Malloch, a professor at Henley Business School, said.

"Some of us who have worked on Wall Street or in the City know that if you get the right people in the right room with the right data and the right energy, and Trump is certainly high energy, you can get things done.

Image copyright Getty Images
Image caption The President interviewed Mr Malloch earlier in January

"I think this will cut out the bureaucrats in effect and it won't take two years, it won't take seven years to actually come to an agreement."

He added: "Obviously there are things to iron out, certainly there are differences and compromises to make, but it can be done.

"So, there won't be a deal signed in the White House on Friday, but there could be an agreement for a framework going forward where people are empowered to have that kind of conversation behind closed doors and it could take as little as 90 days.

"That is very positive and it sends a signal that the United States is behind Great Britain in its hour of need."

Brussels role

Although not yet confirmed, Mr Malloch has been widely reported as being the president's choice for the Brussels role.

The economist and former deputy executive secretary to the United Nations in Geneva went for an interview with the president's team at Trump Tower earlier this month.

If successful, he will be officially nominated by the Secretary of State elect, Rex Tillerson.

The EU has made it clear that Britain cannot enter substantive free trade talks with countries outside the union until it has left the EU, a position Mr Malloch - a supporter of Mr Trump and the Brexit campaign - dismissed.

Image copyright Alex Wong
Image caption If successful, Mr Malloch will be officially nominated by the Secretary of State elect, Rex Tillerson

"I think it is an absurd proposition and may be a legalism," he said.

"There are going to be all kinds of things happening behind closed doors and you can call them what you like.

"The fact is that when your wife is having an affair with someone else, you tell her to stop it, but oftentimes that doesn't stop the relationship."

Impossible to execute

Many trade experts say the "90-day" proposition will be impossible to execute, as there will need to be detailed negotiations on controversial areas such as food imports between the UK and the US, as well as financial services and pharmaceuticals.

"Non-tariff" barriers such as health and safety regulations and the recognition of professional qualifications will also have to be hammered out.

There could also be a need for some form of immigration agreement.

Furthermore, Britain is not yet an autonomous member of the World Trade Organisation, which oversees the rules on free trade deals.

It negotiates as part of the EU's agreement with the global trade regulator.

Government sources insist that transferring full rights to the UK alone will be straightforward.

Mr Malloch said despite the obstacles, Britain would gain a free trade deal well ahead of the rest of the EU and the elections in the Netherlands, France and Germany could lead to a fundamental shake-up of the union.

"I personally am not certain that there will be a European Union with which to have [free trade] negotiations," he said.

'Political reality'

"Will there be potentially numerous bilateral agreements with various countries?

"I think the prospect, in a changed political reality, is greater for that.

"I think Donald Trump is very opposed to supranational organisations, he believes in nation states, in bilateral relations and I think that he thinks the EU has overshot its mark.

"It seems to me as well that Trump believes that the European Union has in recent decades been tilted strongly and most favourably towards Germany."

Mr Malloch said that the present free trade negotiation between the US and the EU - called the Transatlantic Trade and Investment Partnership - was "dead".

He also questioned the future of the single currency.

"The one thing I would do in 2017 is short the euro," Mr Malloch said.

"I think it is a currency that is not only in demise but has a real problem and could in fact collapse in the coming year, year and a half.

"I am not the only person or economist of that point of view.

"Someone as acclaimed as Joseph Stiglitz - the famous World Bank economist - has written an entire book on this subject."

Related Topics