22 Oct 2011

Osborne: euro crisis ‘danger to Britain’

The chancellor calls for a long-term solution to the eurozone’s debt woes as finance ministers gather in Brussels.

George Osborne and Christine Lagarde

George Osborne has said the economic crisis in the eurozone is putting Britain’s recovery in peril and a lasting solution is needed.

The chancellor has joining fellow finance ministers from across the EU in Brussels for a hectic series of summits designed to stop the Greek debt crisis from pulling the whole Eurozone into a tailspin.

Mr Osborne said: “What we’re going to be arguing for at this meeting is a comprehensive solution to this crisis. We’ve had enough of short-term measures, sticking plaster that just gets us through the next few weeks.

“The crisis of the eurozone is a real danger to all of Europe’s economies, including Britain’s.

“We need to address the root causes of the problem with a lasting solution that will help all of Europe’s economies.”

Talks between finance ministers are likely to last until Wednesday.

A meeting on Friday saw 17 ministers approve another slice of bail-out aid worth about £7bn pounds and, according to eurozone leader and Luxembourg prime Minister Jean-Claude Juncker, paved the pay for a massive 50 per cent write-down of Greek debt to ease the country’s burden.

On Friday all 27 EU finance ministers are assessing the risk of “contagion” from Greece to bigger economies like Italy, and finalising plans for a recapitalisation of banks, making them better placed to withstand future economic shocks.

The German Chancellor Angela Merkel and French President Nicolas Sarkozy are due to meet later to try to thrash out their differences over how to shore up the value of the euro and calm jittery financial markets.

They are said to disagree on increasing an existing 440 billion euro (£383bn) bail-out fund four-fold to about two trillion euros (£1.74 trillion).

Mr Osborne said resolving the crisis was now “critical” – the single biggest issue which could boost the British economy and revive growth not just in the eurozone but across the world.

Prime Minister David Cameron is due to attend a summit of EU leaders on Sunday, and that meeting will pave the way for a possible deal on Wednesday.