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
    +1

    Comment number 592.

    Listen to the logic of the statements:

    We will borrow our way out of debt, paying only the interest until the bonds need paying.
    We will then borrow bigger amounts of money to cover those bonds buying more credit with larger amounts of interest, for new bonds.
    I know we will call them Spanish Eurobonds... the exception being that the whole of Europe gets sucked into this incubus.

  • rate this
    +9

    Comment number 591.

    I am euro-sceptic as anyone that reads my post knows and I think that the EU would be a better place without the euro - BUT - we are where we are and I cannot see see any way back that will not end badly or even without bloodshed.

    I am really concerned that there is going to be rough ride ahead for all of us.

  • rate this
    -14

    Comment number 590.

    German growth has benefited hugely from being in the eurozone, to the disadvantage of less competitive South European economies. The real question is: would the UK not equally have benefited massively from being inside the eurozone from the start? By staying out, are we now only exposed to the bad repercussions of the crisis, without having been able to gain from the euro earlier, like Germany?

  • rate this
    -4

    Comment number 589.

    Hyacinth Bucket! The right-wing media will not be there when you are out on the street! DC is playing mind-games, the Tories want the Euro (we joined because of them) to collapse, but can't be seen to be showing their sadistic true-colours.

    If it does collapse (and us not joining the Robin Hood Tax will be mostly responsible) we will all (99%) be worse off

  • rate this
    +3

    Comment number 588.

    570 Other Colours
    Our exports would become attractive. EUR to £1.40 suddenly becomes EUR 1.2 means they can buy more of our goods at a cheaper rate, though selling to the ex-euro countries would be more expensive.
    582 Euro Sceptic
    A lot of business would stitch up governments just to make a quick buck. We are in this mess because governments listen to ex-GS bankers. Co-ops r the way 4ward.

  • rate this
    +2

    Comment number 587.

    576.Luther_Wesley-Baxter
    Angela Merkel would make a wonderful President of the United States of Europe.
    /////
    She's had plenty of opportunity to see what a major pain some of the less efficient countries can cause. Why would she want to be president over that? It's much easier and rewarding for her to stay in charge of Germany. That urban myth of a US of Europe is highly overrated.

  • rate this
    -3

    Comment number 586.

    I find the Anti-Euro comments disconcerting, We in the UK have a currency UNION: England (with north south divide), Wales, Scotland, NIreland, IOM, Ch Islands, Gib, etc etc - ODD it is good enough for the goose but not sufficient for the gander.
    London (aka Germany) has to do a transfer of funds to poorest parts, by their attitude we should stop funding N.Ireland or Wales, drain more than Greece

  • rate this
    +5

    Comment number 585.

    @5.Jesse The Snob Pinkman
    Naivety doesn’t come close to describing your comment. Accusing Cameron of blindly following America and suggesting Blair would have not... Do you think we went into Iraq and Afghanistan (which we cannot aford) without a push from the USA? I think Blair was the parrot, at least cameron has shown some grit rather than blindly following any cause, euro or WMDs..

  • rate this
    +2

    Comment number 584.

    573.sheila coleman

    WE must not bail out countries who won't pay tax ..."

    WE call in 'avoidance', which makes it absolutely fine it seems.

    ---
    "Good thing with Germany is that they don't pay benefits for life, if you haven't a job you have max one yr on benefits then they are stopped, any job has to be taken"

    Which is simply untrue,

    http://www.toytowngermany.com/wiki/Unemployment_benefits

  • Comment number 583.

    All this user's posts have been removed.Why?

  • rate this
    +6

    Comment number 582.

    If we had politicians across Europe with any business experience we might be getting somewhere - we are not. Europe has been talking about the Greek problem for 2 years and all we ever get is another meeting with a photo shoot and nothing else. The UK government keep talking about needing a plan for growth but haven't got a clue where to start. They need professional help but won't ask business

  • rate this
    +5

    Comment number 581.

    I think everything is going to plan here.
    Nearly all politicians aren't stupid, and the idea that you can have a common currency without political and budgetary union is basically stupid. It would never work in the long term.
    Now the Euro is in a sustained crisis they have a valid reason to impose the political and budgetary union leading to the federal Europe which was really all they wanted.

  • rate this
    +5

    Comment number 580.

    The Euro is only in the parlious state it is, because the politicians allowed countries which were blatently not ready to fudge the Maastrict criteria for joining.

    The idea of a single currency is great, just a pity politicians made a complete pigs ear of it by allowing the breathtaking fudges to happen. The only people smiling are Goldman Sachs who made a fortune from fudging Greece's books.

  • rate this
    +3

    Comment number 579.

    Get out of Europe now before it gets worse . We can and will survive with out it

  • rate this
    0

    Comment number 578.

    "562.
    bobloblaw14
    3 Minutes ago

    With respect, the dollar is already dead."

    The dollar's far from dead.

  • rate this
    +5

    Comment number 577.

    @a seditious malcontent

    The current fiat monetary system is too far gone to save.

    Human nature and fiat money combined, only leads to collapse.

    The government will never break free from the banks because its the banks that are in charge, the central one to be precise.

    We use a fiat system and not one single fiat system in history has survived. This one is no different.

  • rate this
    -3

    Comment number 576.

    Angela Merkel would make a wonderful President of the United States of Europe.

  • Comment number 575.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 574.

    All this user's posts have been removed.Why?

  • rate this
    -1

    Comment number 573.

    We use to deal with other non EU countries very well, this would poss return. we have so many restrictions demanded that are not good for us yet our MPs back down. WE must not bail out countries who won't pay tax & overspend anyway. Good thing with Germany is that they don't pay benefits for life, if you haven't a job you have max one yr on benefits then they are stopped, any job has to be taken

 

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