Eurozone crisis: Cameron backs euro but opposes more integration

 

UK Prime Minister David Cameron: "Urgent action is needed"

David Cameron has said he wants the euro to succeed but insists the UK will not be part of further integration seen as "necessary" to help it continue.

Speaking in Berlin, ahead of talks with Chancellor Angela Merkel, the prime minister said the UK's "healthy growth" was linked to the eurozone's fortunes.

But he said the UK would not underwrite Spanish and Greek bank deposits or support an EU-wide financial tax.

Mrs Merkel has suggested that further political union was a pre-condition.

Mr Cameron has said the uncertainty surrounding the eurozone is the biggest threat to global prosperity and a "whole series of measures" is needed to restore market confidence in the ability of countries to pay their debts and support banking liabilities.

Analysis

David Cameron has deliberately avoided piling direct pressure on Germany to shoulder all the responsibility, saying he felt it wasn't right to single out one government.

But he has sought to keep up the pressure in other ways by saying that time was of the essence and the eurozone crisis was the single biggest threat to the world economy.

That message has been backed up by President Obama, who called both the German chancellor and the Italian prime minister the diplomatic equivalent of banging heads together.

In truth, though, the urgency of the situation is not in doubt - it's the means to resolve it where disagreement can still be found.

For example, Germany doesn't like the idea of bailing out Spanish banks directly - Spain doesn't like the idea of taking money with strings.

David Cameron will have to tread a delicate path - being outside the eurozone club he cannot dictate terms, but he's also all too aware that a quick solution is vital for stability and growth at home.

The UK is pressing for a series of solutions, including a larger bailout fund, euro bonds and structural reform within the European Union - which could lead to greater fiscal burden-sharing between the poorest and wealthiest countries.

The prime minister said all Europe's economies, whether in the euro or not, needed a swift resolution of the current instability, and the single currency area as a whole needed to act to demonstrate it could "live within its means".

"We want the euro to succeed and the eurozone to solve the problems it faces so that all European countries - including ours - can get back to healthy growth."

The UK has welcomed plans set out by the European Commission to move towards a common "banking union" across the eurozone - which could allow central authorities to intervene before a bank gets into trouble to prevent taxpayers having to bail it out later on.

'Not our currency'

The prime minister said there was "no doubt" the eurozone would have to work more closely together on banking supervision and in other areas in future as "we know that it is necessary for the single currency to deal with these issues so it can work properly in the future".

But he stressed that the UK - which is not a member of the eurozone - would not be taking part and it was his job to protect British interests as Europe evolved.

"Because we are not in the single currency, we won't take part in the profound elements of that banking union. I wouldn't ask British taxpayers to stand behind the Greek or Spanish deposits. It is not our currency, so that would be inappropriate to do."

UK Chancellor George Osborne said he wanted to ensure safeguards were in place to protect Britain's financial sector if there were moves towards a banking union.

"There is no way that Britain is going to be part of any eurozone banking union," he told BBC Radio 4's Today programme. "I think Britain will require certain safeguards if there is a full blown banking union."

He stressed the UK coalition government's commitment to a referendum on Europe in the event of a "significant transfer of power and sovereignty" to the EU but said he did not believe that would necessarily happen as a result of the current negotiations.

Mrs Merkel told German television on Thursday that Europe needed "a political union first and foremost" and that individual countries must "cede responsibilities to Europe step-by-step".

But at a joint press conference with Mr Cameron, Mrs Merkel said different EU countries had taken part in different aspects of political and economic integration in the past, and this approach would continue.

 

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  • rate this
    +21

    Comment number 352.

    As ever, they think more about the welfare of the banks & their rotten money system rather than what is best for the people.

    Things should really be getting better as we evolve. It's a long time ago we left the caves. We've done marvellous things and are capable of much more.

    Instead, these leaders insist on pampering the toxic financial sector at our very great expense. No excuse good enough.

  • rate this
    -3

    Comment number 351.

    Remember when left-wingers use to sneer at the "little Englanders" for not wanting to go into the Euro, remember when they use to say adopting the Euro was "inevitable". And recall the left's doom laden predictions about global warming that have failed to materialise.

    Left-wingers like to think they are intellectually superior in reality their naivety makes them stupid.

  • rate this
    0

    Comment number 350.

    A rather transparent attempt by Cameron to get chummy with our new German monetary overlords. Clean your nose Cameron, it's covered in

  • rate this
    +2

    Comment number 349.

    "JasonEssex
    Greece is probably the exception."

    Yes. In 2007 (last year b4 the crash) Spain ran a budget surplus, Ireland a balanced budget. UK had a 2.8% deficit and Greece a 6.7% one! By 2010 Spain had a 10% deficit, Ireland 32% deficit all due to their bank bailouts, not public spending programmes. Greece had 10% deficit about the same as the UK and USA.

  • rate this
    -1

    Comment number 348.

    Dodgy Dave knows that he and Georgie Porgy are making a "pig's ear" of the British economy so now he is trying to win a bit of sympathy and support from Auntie Angela who is about the only European leader with a healthy bank balance and very much calling the shots right now over the future of the EU which is definitely faltering on the edge of the precipice.

  • rate this
    0

    Comment number 347.

    Let Spain and Greece join in your "Commonwealth" or Old British Empire then the UK can pay for them.

  • rate this
    -1

    Comment number 346.

    Cameron: Every day EU economies are stagnant are days when opportunities are lost, wealth is lost, jobs can be lost so we need to get our economies moving. Whose economies - US & UK?
    Clearly EZ is the biggest threat to the world economy; it the biggest challenge that we face today. What has EZ been exposed to that did not come out of US to UK?

  • rate this
    +2

    Comment number 345.

    338 ConorMacleod
    Certainly some responsibility lies with the governments, but the vast majority of their problems resulted from bailing out their banks, which was caused by cheap credit resulting from a one size fits all exchange/interest rate. Greece is probably the exception.

  • rate this
    -1

    Comment number 344.

    334. Its All Pants

    Seriously? We are not in the Euro, thats why.
    Do you actually know anything about the EU and Euro?

  • rate this
    +2

    Comment number 343.

    Spains banks are in a lot worse position then they are saying, at the moment they are looking to write off around 50%, prices have fallen by more than that and are still going down. The banks have a vast property portfolio which they can't sell and developers have stopped building. They need the ESP to boost house sales at low prices and save their economy.

  • rate this
    +2

    Comment number 342.

    It's amazing, given all that history has to teach us on the subject, that this infantile attempt at pan-european confederacy was the work of fully grown adults. Adults who are supposed to know about politics!
    That it is crumbling now is only the inevitable & predictable end of such folly.
    I fear for the Spanish people: innocent victims of greed-driven, childish ideology.

  • rate this
    +14

    Comment number 341.

    As I see it, when countries signed up for the Euro they signed up to being one large economy. Only no one has ever acted like this, and each country continues to be individual. The Germans lend money but require it back as it's their money. But if the money wasn't a loan other countries would most likely spend it on German goods, and they get money back anyway. But maybe I'm just naive...

  • rate this
    +1

    Comment number 340.

    297. This is not correct.

    GDP is imprecise but it is best we have. However, if you don't trust it then go to Hong Kong and merely observe

    In fact the economics which I have a liking for did predict the crash.

  • rate this
    +1

    Comment number 339.

    Greece exits Euro in 2013, followed by Portugal and Spain. Italy hangs by a thread but Frances banks are decimated and Germany no longer has the will or the money left for meaningful action. Mass renegotiation of membership ensues forming a new 'EuroLIte' currency with Southern European nations excluded. UK sits it out forming a stable base for reinvestment with lower taxes. Bet I'm not far off.

  • rate this
    +1

    Comment number 338.

    321.JasonEssex
    That sounds like an attempt to pass the buck.
    The EU were not blameless but no one forced the PIIGS countries to spend money recklessly - no one forced them to cave in to greedy union demands. They should have used the money to diversify their economies and plan sensibly for their long term future. These countries should take responsibility for their economic mismanagement.

  • rate this
    -1

    Comment number 337.

    In a conversation on Tuesday, Cameron & Obama agreed on the need for an "immediate plan" to stabilise the single currency area & to restore market confidence in the ability of countries to support their banks and pay their debts.
    What is this great interest from the US/UK? Mr Cameron said "speed is of the essence".
    What is this great interest from the US/UK.
    US is broke; UK is in troubleā€¦

  • rate this
    +1

    Comment number 336.

    Germany were happy to have the benefits of economic union in the good times, time to bite the bullet.

    Guarantee deposits but not investments and let the banks go under.
    Use the housing stock to re home the homeless (we have some to give)
    The total shortfall of funds is still probably less than combined cumulative bonus payments. time for bans to fail and bankers to return to the real world.

  • rate this
    +2

    Comment number 335.

    Spain is playing a dangerous game. By wanting the cash to go directly to the banks and thus avoid the same measures imposed on Greece (wanting cake and eating it) she is banking on the rest of the EU saying she is too big to be allowed to fail and so it coughs up.-----Russian roulette with the whole of Europe, I say call Spain's bluff

  • rate this
    0

    Comment number 334.

    317.
    Question is why arnt we doing the same as them then?!!!

  • rate this
    0

    Comment number 333.

    When is someone at the 'top' going to realise its a lost cause. Not the euro itself but the banking system its in hock to.
    All we are doing at the moment is putting off the inevitable while the banks hide assets out of reach so that when they finally all go down they have a nest egg somewhere.
    If the banks dont fail then I bet we will have payed more than a payday loan client to keep them up.

 

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