UK Politics

Eurozone crisis: Cameron backs euro but opposes more integration

Media captionUK 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.

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.

Media captionGeorge Osborne: There is a "remorseless logic" in the eurozone moving towards a fiscal 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.