UK Politics

Osborne: Eurozone deal must not lose momentum

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Media captionGeorge Osborne: ''They've started down the right road; now they have to finish the job''

Chancellor George Osborne has said the eurozone is on the "right road" but "pressure" must be kept on its leaders to put the debt deal into practice.

He also insisted the UK would not pay into any International Monetary Fund package targeted at the eurozone.

The deal will recapitalise Europe's banks, write off 50% of Greek debt and boost the eurozone's main bailout fund.

Labour welcomed the agreement, but said the "missing piece" was a plan to boost growth and create jobs across Europe.

Mr Osborne told the BBC Europe was now in "a much better place", but it was vital the timetable did not slip.

"We've got to maintain the momentum from last night and turn what was a good package into something that's got all the detail and is actually going to work in practice," he told BBC Radio 4's Today programme.

'Real influence'

The agreement is aimed at preventing the Greek debt crisis spreading to larger eurozone economies like Italy, and includes a new bailout fund, worth about 1tn euros (£880bn; $1.4tn), which is due to be in place in November.

Mr Osborne said there were still "very important questions" to be answered - for example about the role of China in the bailout fund - but added: "The eurozone leaders have grasped the seriousness of the situation.

"The pressure has paid off in that respect and now we have got to maintain the pressure to put the package into place and fill in the blank spaces that remain."

As it is outside the euro, the UK was excluded from certain parts of the negotiations, but Mr Osborne said Britain had "real influence in putting pressure on the eurozone".

He added: "It's going to be a difficult road ahead, but they are on the right road and it's massively in Britain's national interests that they sort these problems out."

IMF resources

In a statement later to the House of Commons, Mr Osborne said there may be a case for further increasing the budget of the IMF to keep pace with the size of the global economy.

But he said: "Let me be very clear, we are only prepared to see an increase in the resources the IMF makes available to all countries of the world.

"We would not be prepared to see IMF resources reserved only for the eurozone."

About £4.9bn of UK money is held in the IMF's fund but it could draw down up to £29.4bn from the Treasury in certain circumstances.

For Labour, shadow chancellor Ed Balls said: "The eurozone going into a protracted crisis would make things worse for us, and therefore we all really hope this deal is going to work... but that does not solve Britain's problem.

"Unless we get a plan for jobs and growth in Britain, and I have to say across Europe too, unless we get growth in our economies, this is not going to be a solution."


The UK government is supporting greater fiscal integration among eurozone countries as part of tackling the current crisis.

But some critics have warned this could leave non-euro EU members like Britain, Sweden and Poland excluded from key decisions affecting the whole of Europe.

Backbench Conservative MP David Nuttall told the Commons there was a "real danger" the 17 eurozone nations would "start to agree policies to suit themselves and then impose them on the other 10 EU countries".

Mr Osborne agreed that Britain had to be "alert to the danger" of the 17 members of the eurozone "caucusing on areas which should legitimately be the preserve of the 27 [European Union members]".

He told MPs that David Cameron had dinner with the Swedish and Polish prime ministers on Wednesday night to discuss that very risk.

Europe's leaders have agreed to change the EU's treaty, if necessary, to allow greater fiscal integration.

Mr Cameron says he has sought assurances to protect Britain's interest if there is change - and suggested it could provide an opportunity to repatriate some powers from Brussels.

Tory Eurosceptic John Baron told BBC Radio 4's World at One that should be a given.

"We want [fiscal] cooperation, but the quid pro quo of that should be that we as a country should be allowed to have the sort relationship we want, which would include a free trade area," he said.

"Looking at the balance of trade, the Europeans benefit from that more than we do, so I don't think they would object to it."

'Bottom edge'

Mr Cameron's spokesman said any treaty change was not likely to be "significant" and so would not trigger a referendum, as some Tory backbenchers have suggested.

Deputy Prime Minister Nick Clegg said: "The issue now is about jobs, growth, the economy, that's what people care about rather than arcane debates about treaty change that may or may not occur."

Mr Clegg said the Brussels summit had been "very significant" and he hoped the eurozone was now "starting to turn the corner".

But Liberal Democrat MEP Sharon Bowles told the BBC the eurozone deal was on "the bottom edge of what we thought was enough".

She said that member states were not prepared to put more money at risk, and they would have to hope the deal created stability for long enough get growth initiatives underway.

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