Uncertainty about the future of the eurozone is killing off a UK economic recovery already threatened by high oil prices and Britain’s debt burden, says the Chancellor George Osborne.
“Decisions taken over the next few months could determine the economic future of the whole European continent for the next decade and beyond,” he warns.
The risks for us of a disorderly outcome (to the eurozone crisis) are huge. George Osborne, chancellor of the exchequer
Mr Osborne stresses that a resolution of the eurozone crisis is in Britain’s interests. Europe is the UK’s biggest export market, he says, and “the risks for us of a disorderly outcome are huge”.
For the eurozone to emerge from the current crisis, he suggests it needs to follow the “remorseless logic” of monetary union towards much greater fiscal integration – precisely the reason why he has in the past campaigned against UK membership of the euro.
At the same time, the chancellor states that an integrated single market, including in financial services, is in Britain’s and Europe’s interests – “But the rules that govern it must continue to be determined by all 27 members of the EU.”
Shadow Chancellor Ed Balls said Mr Osborne could not blame the eurozone’s problems for his mistakes in handling the UK economy.
“It’s deeply complacent and out of touch for George Osborne to blame Europe for a double-dip recession made in Downing Street,” he said. “He will fool nobody with these increasingly desperate excuses.
It’s deeply complacent for George Osborne to blame Europe for a double-dip recesson made in Downing Street. Ed Balls, shadow chancellor
“Despite the eurozone crisis, Germany, France and the euro area as a whole have so far avoided recession while Britain’s recovery was choked off in the autumn of 2010.
“We urgently need a change of course and a plan for jobs and growth, here in Britain and in the eurozone… If we fail to act now, we will pay a very heavy long-term price.”
The chancellor’s article appears less than a day after it was confirmed the troubled Spanish banking sector would apply for a bailout of up to £100bn.
The focus of the eurzone crisis turned to Spain last month when the government there was forced to nationalise Bankia, the country’s fourth largest lender, as it struggled with a capital shortfall in the wake of the 2008 property crash.