Greece euro exit bad for EU - Commissioner Almunia

EU Commissioner Joaquin Almunia Commissioner Almunia: EU institutions need a bigger say in eurozone policy

A Greek exit from the euro would be "very negative" for the rest of Europe, the EU's Competition Commissioner Joaquin Almunia has warned.

"I'm sure we'll all suffer negative consequences if we're unable to keep the Greeks in," he said in London, during a debate on Europe.

He also said the Franco-German "duopoly" in eurozone policy had undermined the EU's role in the crisis.

Greece's credit lifeline is now at risk, after voters rejected austerity.

Fringe parties - most notably left-wing groups and ultra-nationalists - scored well, plunging Greece into a fresh political crisis. They reject the tough conditions of Greece's EU/IMF bailout.

France's outgoing President Nicolas Sarkozy forged a tight political alliance with German Chancellor Angela Merkel, and their meetings were key to shaping the EU's response to the eurozone debt crisis.

France's new Socialist President Francois Hollande will hold his first post-election meeting with Mrs Merkel on Tuesday. He wants to rebalance the Franco-German relationship by persuading Germany to embrace measures to stimulate growth.

Mr Almunia said the European Parliament had been to some extent marginalised by France and Germany. "I don't like this situation - it cannot continue," he said in the debate organised by the Centre for European Reform think-tank.

Ballot paper in Schleswig-Holstein Mrs Merkel's Christian Democrats have had big setbacks in regional elections

He said the Maastricht Treaty which launched the single currency had made most of the rules for monetary union inter-governmental, allowing France and Germany to "deepen their duopoly".

"We need to come back to the [European] community method and reinforce the European Parliament's role - that will also strengthen the role of the [EU] Commission," he said.

EU elite criticised

The former UK commissioner in Brussels, Lord Mandelson, said the crisis showed the need for much wider public engagement in Europe.

Lord Mandelson, who also served in the Labour cabinet, said "the eurozone needs more solidarity" in the current crisis. He called for a "eurozone Mark Two".

"Above all, the eurozone needs institutional arrangements that project confidence in its own future, it needs an end to improvisation.

"The era of a European project driven by an elite is over - and I'm rather pleased it is," he said.

UK Shadow Chancellor Ed Balls opposed the idea of Britain joining the euro when he was in the Labour government - a stance that at the time put him at odds with Lord Mandelson.

In Monday's debate he said the EU had "underestimated the radical nature of the euro endeavour". He highlighted the imbalance in competitiveness among the 17 eurozone countries.

But he echoed Lord Mandelson in suggesting that Britain's relationship with Europe might have to be put to a referendum in future. "It might be an issue whose time comes, but it's not sensible now," he said.

There have been repeated calls by Conservatives in Britain's ruling coalition for a referendum on the UK's relationship with the EU - including some who want a straight "in" or "out" question for voters.

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