David Cameron calls for urgency on eurozone crisis

After talks on treadmill with Barack Obama, UK prime minister says banks and firewalls must be strengthened

David Cameron has said a sense of urgency is needed to tackle the eurozone crisis following a meeting with the US president, Barack Obama.

The British prime minister called for measures to be put in place to strengthen banks and take forward deficit reduction after he held discussions with the president while both exercised on treadmills.

Speaking in Maryland, US, before the G8 summit, he said: “Contingency plans need to be put in place and the strengthening of banks, governance, firewalls – all of those things need to take place very fast,” he said.

The prime minister added that the eurozone should imitate British economic management, with an emphasis on deficit reduction plans, strong banks and an independent monetary policy.

“The eurozone I believe needs that approach as well,” he said. “You need a deficit reduction plan in order to get growth, in order to have the low interest rates that we have in Britain and are vital for the future of our economy”.

The political uncertainty in Greece threatens to further damage the economies of both the eurozone and Britain.

Britain is currently performing better in some economic indicators than the eurozone but European figures are dragged down by the economic problems of Greece, Portugal, Ireland, Spain and Italy. Britain is forecast to have growth of 0.4% in 2012 compared to the eurozone which expects to contract by 0.6%.

Unemployment is lower in Britain, which also has higher inflation. However, Britain’s current account deficit is much higher at 1.6% than the eurozone with 0.1%. Britain is also running a budget deficit of 7.7% compared to the eurozone’s 3.5%.

Cameron said German chancellor, Angela Merkel, was “absolutely right” that every country needed to have in place strong plans for dealing with their deficits.

“Growth and austerity aren’t alternatives,” he said.

“You need a deficit reduction plan in order to get growth, in order to have the low interest rates that we have in Britain and are vital for the future of our economy.”

Cameron said the leaders of the Group of Eight major economies – the US, Russia, Japan, Britain, France, Germany, Italy and Canada – were making progress on addressing the two biggest threats to their economies: the eurozone crisis and oil prices.

“We are addressing here the two biggest threats to all our economies and that is of course the eurozone crisis but also the very high oil prices that translate into high prices at the pumps and we are making progress on both,” Cameron told reporters.

But Obama has aligned himself with Italy’s prime minister, Mario Monti, and the new French president, François Hollande, in putting more emphasis on growth.

That places pressure on Merkel, who has pushed fiscal austerity as the prime means of bringing down huge debt levels that are burdening European economies.

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