Eurozone states discuss solution

Jun 19 2012

Eurozone countries at the G20 summit in Mexico are "inching towards" a wide-ranging scheme to deal with the problems of the single currency, Chancellor George Osborne has said.

Massive pressure has been placed on the EU members of the G20 in Los Cabos, particularly Germany, to take further action, after markets failed to respond to the recapitalisation of Spanish banks and the election of pro-bailout parties in Greece.

Mr Osborne cautioned against thinking that a full solution to the eurozone crisis would be reached at this week's summit. But he indicated that he expects steps to be announced either after a meeting of eurozone leaders in Rome at the end of this week or at the full European Council in Brussels next week.

No details of a possible scheme were available but it is thought that eurozone countries are considering using injections of funds through the European Central Bank or the single currency bailout mechanisms to shore up weaker countries like Greece and Spain.

The resources would be designed to spread the risk of debt between the 17-nation euro bloc, and reduce the high interest rates on government bonds which have made it difficult for Athens, Madrid and Rome to service their debts.

In a round of TV interviews at the Los Cabos summit, Mr Osborne said: "Basically, we do need to see the richer countries, like Germany like Holland, spend some of their resource in propping up the weaker countries of the eurozone.

"Obviously it is difficult for them to do that, it is not a popular thing to do but it is absolutely necessary.

"I think there are signs that the eurozone are moving towards richer countries standing behind their banks and standing behind the weaker countries.

"It's a reminder of why we are not in the euro, because I think British taxpayers would find these things difficult to stomach.

"But British taxpayers need to see the eurozone sort their act out if we are going to get sustainable growth and jobs."