Cameron: 'Important progress' in eurozone deal

George Osborne Mr Osborne said there were 'systematic problems' in the eurozone

David Cameron has hailed "important progress" at the G20 summit towards a solution to the crisis in the eurozone.

European leaders have pledged to maintain stability in the eurozone and to work with the next Greek government towards reform.

Earlier, Chancellor George Osborne said a scheme to deal with the crisis was "inching closer".

He said there were signs richer countries were preparing to "stand behind" those countries in difficulty.

The prime minister said the eurozone countries at the G20 meeting in Los Cabos in Mexico had agreed "to make all necessary policy measures to safeguard the integrity and stability of the eurozone, including breaking the link between the sovereign debt problems and bank instability".

He said: "They committed to take steps towards fiscal and economic integration including through a banking union.

"These are significant agreements. Now the eurozone countries need to get on and implement them."

He added: "What I have sensed at this summit is that there is a fresh impetus with the eurozone members in terms of using all the mechanisms, institutions and firepower that they have to stand up and support their currency."

Speaking at the G20, Mr Osborne said: "Basically, we do need to see the richer countries, like Germany like Holland, spend some of their resource in propping up the weaker countries of the eurozone.

"I think there are signs that the eurozone are moving towards richer countries standing behind their banks and standing behind the weaker countries."

'Systemic problems'

BBC political editor Nick Robinson said the government was hopeful the bigger eurozone economies would signal their intention to use two existing funds to help shore up banks or buy the debt of weaker countries like Greece.

The funds expected to be used are the European Financial Stability Facility and European Stability Mechanism.

The chancellor cautioned: "I think one thing we have learnt is: don't expect a single summit to solve the eurozone's problems, otherwise you are going to be disappointed.

"I am not claiming that this summit has solved those problems but the eurozone is inching towards solutions."

He added: "These are systemic problems in the eurozone which require a systemic answer and we need to see measures from the eurozone that help bring borrowing costs down, that help ensure that there are common resources transferred from richer countries to poorer countries, that the whole eurozone stands behind the banks of the eurozone."

'Credibility'

The chancellor also signalled that he will be announcing further investments in housing and infrastructure in the next few weeks.

This will not involve using new public money but the government will instead promise to underwrite projects, therefore reducing the risk for private sector investors.

He said: "Of course we have our challenges, but we have also taken the difficult steps necessary to have low borrowing costs.

"We are seen here in the G20 as part of the solution to the world's problems, not part of those problems.

"And I would say we need to take further steps to use the credibility we have earned, the good balance sheet, the good name we have earned for ourselves to guarantee more housing projects, more infrastructure projects, to undertake the kind of support for businesses that the governor of the Bank (of England) and I announced last week."

It follows comments from the Business Secretary Vince Cable that "a big expansion" in housebuilding could help the economic recovery.

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