Wednesday, 16 May 2012

0 England PM queries single currency survival

The survival of the European single currency is in question, creating "huge risks" for Britain's economy, Prime Minister David Cameron is to say.

In his starkest warning yet of the possible failure of the euro, Mr Cameron will say that the single currency now stands "at a crossroads" and must choose between "make up" or "break up".

England PM queries single currency survival

He will promise to do "whatever is necessary" to keep Britain safe if the euro falls apart.

But he will reject Labour calls for a change of course on economic policy, insisting that his deficit-reduction strategy is bearing fruit and any relaxation now would mean longer and deeper austerity in the future.

Mr Cameron's warnings, in a high-profile speech on the economy, come amid continuing market turmoil across Europe fuelled by political uncertainty in Greece, which yesterday announced a second election in little more than a month after talks to form a coalition government failed.

Unconfirmed reports suggested that the European Central Bank has stopped lending to some Greek banks which have not been adequately recapitalised, while the country's president acknowledged that savers are withdrawing millions of euros from accounts out of fear of default and exit from the single currency.

Bank of England governor Sir Mervyn King said the eurozone was "tearing itself apart without any obvious solution" and confirmed he and his colleagues are working on contingency plans in the event of a worst-case scenario. Warning that the UK was at risk of being in the path of the eurozone storm, the Governor slashed growth forecasts for 2012, and ruled out a return to pre-financial crisis levels of growth before 2014.

Today, Mr Cameron is expected to make clear his frustration with the failure of Berlin and Paris to take the steps he believes necessary to support weaker economies in the eurozone.

Speaking to business leaders in the North West, he will say: "The eurozone is at a crossroads. It either has to make up or it is looking at a potential break-up.

Shadow chancellor Ed Balls said: "David Cameron is totally out of touch and deeply complacent if he thinks Britain is on the right course. His failed policies have pushed us into recession and the Government is now set to borrow an extra £150 billion to pay for this economic failure.


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