The euro is a flawed construct and Germany’s budget savings policy is making it harder for other countries in the currency bloc to regain competitiveness, billionaire investor George Soros said on Wednesday.

Soros said the euro was an incomplete currency from the start as the European Union’s Maastricht Treaty established a monetary union without a political union.

“The euro is a patently flawed construct,” Soros, who earned $1 billion in 1992 by betting against the British pound, said in the text of a speech for delivery at Berlin’s Humboldt University.

He also criticized Germany’s attitude toward the EU.

“By insisting on pro-cyclical policies, Germany is endangering the European Union. I realize that this is a grave accusation but I am afraid it is justified,” he said.

“By cutting its budget deficit and resisting a rise in wages to compensate for the decline in the purchasing power of the euro, Germany is actually making it more difficult for the other countries to regain competitiveness,” he added.

Soros called for Europe to grow its way out of trouble and to then revise and strengthen the structure of the euro. “This cannot be done without German leadership,” he said.

Soros added that the euro zone crisis “has a fiscal component and a banking component and the latter is just now approaching a climax.”

Chancellor Angela Merkel unveiled plans earlier this month for 80 billion euros ($107 billion) in budget cuts over the next four years – a package she hopes will bring Germany’s structural deficit within European Union limits by 2013.

Thousands in Germany protested the measures, which union leaders said were “economically damaging.”

“Right now the Germans are dragging their neighbours into deflation, which threatens a long phase of stagnation. And that leads to nationalism, social unrest and xenophobia. Democracy itself could be at risk,” Soros said.

“Germany is globally isolated … Why don’t they let their salaries rise? That would help other EU states to pick up.”

Merkel on Monday defended her budget cut plans after U.S. President Barack Obama preached patience in clamping down on public spending.

A German government official said on Tuesday Berlin did not expect to come under pressure at a G20 summit in Toronto this weekend to provide fresh stimulus measures.

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