Ambrose Evans-Pritchard — EU has squandered last chance to make euro workable, warns Ex-Bundesbank chief

Forward or forget it.

The former head of the German Bundesbank has warned that the European Central Bank (ECB) will not succeed in raising inflation for years to come and is almost powerless to revive the fortunes of the eurozone on its own. 

Axel Weber, now chairman of UBS and widely-regarded as Europe's most influential private banker, said Europe's leaders had squandered the chance to rebuild the eurozone's foundations when the going was good and markets were calm. 

In an ominous sign, he appeared to lose confidence in the euro altogether, cautioning that monetary union will be tested repeatedly and may not survive unless EMU leaders agree to bite the bullet on full fiscal and political union.…

Mr Weber warned that central banks are pursuing policies in a narrow self-interest without much regard for the global knock-on effects, though he stopped short of calling it a currency war. "The international system at the moment is seriously unanchored," he said. 

The effect is finally ricocheting back into the US in the form of a surging dollar and rising risks in the US high-yield debt market. Mr Weber said the Federal Reserve may not be able to tighten policy or raise rates as soon as the markets seem to expect. "I don't think the Fed can continue on the path announced," he said.

The Telegraph EU has squandered last chance to make euro workable, warns Ex-Bundesbank chief Ambrose Evans-Pritchard