Prime minister says crisis could continue for some time
Britain may have to seek fresh export markets outside the EU as the euro crisis is now facing such entrenched political obstacles that it could be impossible to resolve, David Cameron warned on Monday at the first day of the G20 world leaders’ summit in Los Cabos, Mexico.
Eurozone leaders faced intense pressure from G20 countries outside the eurozone – including the US, Australia and Indonesia – to sort out their problems after nearly two years of crisis.
Barack Obama sought out a specific bilateral with Angela Merkel as well as a collective meeting with representatives of Italy, Spain, France, Germany and Britain.
Cameron said: “It may be that the eurozone crisis is going to continue for some time, in which case the UK must do all it can to put its own house in order and link up with the fastest growing parts of the world.”
He said a longer term roadmap for a more stable single currency was going to be hard to achieve.
“For it to work it has to have features of a single currency across the globe and that means a system for supporting the parts that are not functioning properly – fiscal transfers, you need to have a central bank that stands fully behind the currency, and a banking union,” he said.
“The difficulty of the roadmap is that the things that need to be done economically are politically very difficult to deliver.”
He pointed out that Europe was currently holding a football tournament and each country was supporting its own team, implying there was not sufficient sense of Europeanhood for the necessary pooling of sovereignty to make a single currency at present work.
He criticised the economic policies of the French president, François Hollande. Cameron said that if Hollande introduced a 75% income tax, he would “roll out the red carpet and welcome more French businesses to Britain and they can pay tax in Britain and pay for our health service and schools and everything else”.
Cameron is already at odds with the French over Hollande’s desire to switch to a growth policy including greater demand management.
Speaking to reporters, Cameron added to his sense of pessimism by sketching out three alternatives for the euro area.
“Option one is that they take action to strengthen the eurozone, to make it more coherent. If this deals with the current problems it is clearly in their and our interests. Option three is they don’t take any of these steps and dominoes start to fall, which would have very severe financial consequences across the world and would seriously affect us.
“Option two is enough financial action and just enough political and economic action to keep the show on the road but without solving fundamental problems.”