Britain's Treasury chief has warned that uncertainty over the future of Europe's single currency is threatening to keep his country from returning to economic growth.
In an article published in the Sunday Telegraph George Osborne claimed that Britain's attempt to pull itself out of recession was "being killed off by the crisis on our doorstep."
The 17 countries that use the euro as their common currency are facing a critical juncture as weaker economies struggle to deal with the astronomical debts racked up by banks and governments during boom years. Ireland and Greece have already been forced to ask for tens billions of euros (dollars) worth of bailouts in order to avoid going bust.
On Saturday, Spain became the latest European economy to seek a massive rescue package, and with investors bracing for worse to come, Osborne said the uncertainty was weighing on Britain.
"A resolution of the eurozone crisis would do more than anything else to give our economy a boost," he wrote, arguing that his country's neighbors needed to pool more of their resources — "whether through common eurobonds or some other mechanism" — to beat the challenge.
Britain is in an unusual position vis-a-vis the eurozone. The country's ruling Conservative Party fought hard to hold on to the British pound — a decision that many say has been vindicated by the euro's problems — but the 17-nation single currency bloc is Britain's single largest export market, one that needs to stay healthy if the U.K. is to turn around its flagging economy.
The stakes for the Tories are high: They came into office promising to reduce the government's debt and restore growth following the global financial crisis and years of government overspending. Instead, the country has slipped into a new recession and debt remains stubbornly high. If the European currency crisis drags the British economy down further, the Conservatives could be expected to suffer politically.
But Tories — who traditionally oppose delegating any more power to European Union — have resisted moves to get non-eurozone nations into any new fiscal pact, which leaves British politicians in the awkward position of shouting advice from the sidelines.
In his article, Osborne called on eurozone members to offer more support to their weaker neighbors, adopt collective money-raising tools such as the proposed eurobonds, create a banking union, and engage in "much closer collective oversight of fiscal and financial policy."
Foreign Secretary William Hague also chimed in Sunday, telling Sky News television that he wanted the eurozone "to take decisive measures to stabilize itself."
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