UK Politics

David Cameron: Eurozone must sort itself out

David Cameron at the G20 summit in Cannes
Image caption David Cameron insists UK taxpayers' money is not at risk in the hands of the IMF

David Cameron has said eurozone leaders must "sort themselves out" before they can expect help from the International Monetary Fund.

In a statement to MPs the prime minister said the UK had "agreed in principle" to boost IMF resources.

But he said the IMF could not be a substitute for the European Central Bank and would not contribute to any eurozone bailout.

Labour leader Ed Miliband said the PM was "complacent and out of touch".

On Sunday, Chief Secretary to the Treasury Danny Alexander said the UK's commitment to the IMF could rise to as much as £40bn.

Members of the G20 group of leading industrial nations met in Cannes last week to discuss the global financial crisis and particularly the situation in the eurozone and in Greece.

The meeting broke up with a plan to boost growth, but no agreement on the eurozone.

'Clear message'

The prime minister told the Commons he accepted the summit had "not achieved a breakthrough" but "some progress" had been made.

On the subject of the IMF, he said it was "essential for confidence and economic stability that the IMF has the resources it needs".

But he said it was right that countries like the UK, Russia, China and the United States had not set out any concrete commitments on the timing, extent or exact nature of an IMF boost.

"The G20 withheld specific IMF commitments at this stage precisely because we wanted to see more concrete action from eurozone countries to make their firewall credible and to stand behind their currency," he said.

"In short, the world sent a clear message to the eurozone - sort yourselves out and then we will help, not the other way round."

On the subject of a financial transaction tax - or Robin Hood tax - which is favoured by the European Commission and countries like France - Mr Cameron said the UK was "not opposed in principle" to the idea.

But he said any such tax must be implemented globally to avoid disadvantaging any nation - and at present, Europe's proposals on such a move were "deeply confused".

He said some European countries and institutions appeared to have "spent this money several times over".

"When we talk about the European budget, it's given as the great way to raise money for the European budget," he said.

"When we talk about development, that's the way we're going to pay for development. When we talk about climate change it suddenly becomes the magic way to meet all our climate change commitments.

"I don't think, frankly, that we should let other European countries get away with that."

'Collective austerity'

He said that 80% of the money raised would come from UK businesses, he said, joking that he sometimes wanted to suggest "a cheese tax" to the French.

Responding to the prime minister's statement, Mr Miliband said there had been no action at the G20 to address the most pressing problems like unemployment.

"Isn't the real problem this, that the prime minister doesn't really believe we need a global plan for growth," he said.

"He thinks the answer for the world is collective austerity."

He added: "This was a do nothing summit from a deeply complacent prime minister out of touch with the needs of economy."

The Labour leader also said it was still not clear, despite Mr Cameron's assurances that UK would not contribute to a eurozone bailout, whether British money could go via the IMF to indirectly make up for a shortfall in the eurozone bailout fund.

But Mr Cameron said "those who propose that we walk away from the IMF" were "not acting responsibly or in the best interests of Britain".

More on this story