July 20, 2011
George Osborne has urged eurozone leaders to “get a grip” on the sovereign debt crisis at their summit today, warning that failure to do so could unleash an economic crisis as serious as the recession that followed the banking crash of 2008.
The chancellor told the Financial Times he was “very worried” about the possibility of the eurozone crisis spiralling out of control, warning that it posed an additional threat to Britain’s already “tough” economic situation.
“We see the potential for a set of economic events that could be as damaging as 2008,” he said, as he made his most direct intervention yet in the eurozone crisis.
The chancellor was optimistic that the eurogroup of finance ministers would make progress with involving the private sector in reducing Greece’s debts but said this was only the first step towards a necessary fiscal union in the single currency area.
He recognised that his enthusiasm for greater eurozone integration turned British policy on its head, since it ends the government’s long-standing desire to frustrate the creation of a two-speed Europe. He said “the remorseless logic” of monetary union was greater fiscal union.
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