Osborne warns over Greek euro exit

By Press Association , Jun 15, 2012
Filed under: Investing

George Osborne has warned of dire consequences if Greece leaves the eurozone without an "ambitious" plan to deal with the fallout.

The Chancellor again suggested that so-called "Grexit" might be the only way to force fundamental reform in the currency area.

Broken Britain

But allowing the struggling country to leave before measures were in place to contain contagion would be the "worst case for everybody".

Broken Britain

The comments, in Mr Osborne's annual speech to bankers at the Mansion House, came after interest rates on Spanish bonds hit fresh highs - sparking fears about the country's ability to service debts.

Mr Osborne said that without greater fiscal integration "the economic and political strains of deleveraging and balance sheet repair in the eurozone periphery may prove unbearable".

The solution had to involve stronger countries agreeing to help weaker ones, more pooling of resources, and a "shared backstop" for the banking system.

"The political paradox Europe faces right now is this: some or all of these things are needed for the existing countries in the eurozone to make their currency work, but it may take Greek exit to make it happen," he said.

"That is a decision for the eurozone and the Greek people. One thing is for sure: if exit is the chosen route then the eurozone must have a very good plan in place to prevent contagion. The worst case for everyone would be exit without a sufficiently ambitious response. But carrying on with the current uncertainty and instability is not much better. A time for decisions has come."

Mr Osborne said the risks to Britain from a "disorderly collapse" of the euro were "huge".

The economic conditions were "as difficult perhaps as any our country or our continent has faced outside of war". However, he rejected the idea that the UK should participate in banking union to help stabilise the financial system in the currency bloc.

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Tags: bailout, euro, europe, Eurozone, george osborne, greece, recession-economy

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zxd.eddy

He ( tories) probably hope it happens so the slippery gits can blame the demise of britain on Greece

June 15 2012 at 6:18 AM Report abuse Permalink +1 rate up rate down Reply

tonybarker298

Greece should leave the Euro, it would be hard in the first year but then they would be better off. The lending of funds in the bail outs only cover interest payments and the debt gets bigger. The debt is not the peoples debt and has done them no good. The debt is odious under international law. Let them print their own drachma's for their internal currency and their EU central bank print euros for international trade. They could produce their own goods in-house and the 17bn annual trade deficit, (what the Government spends and what it collects in tax) would be paid for by greater employment.

Seeing this would probably be the end of the euro if Italy and Spain follow and I hope the euro does crash, it is a failed project.

June 15 2012 at 5:37 AM Report abuse Permalink +3 rate up rate down Reply

1 reply to tonybarker298's comment

majdf18148

And who avoided taxes as a national pasttime,, who enjoyed full state retirement at 50-55, who used the lavish public sector facilities provided to them? Of course it's the Greek nation's debt just as our debt is ours! One of the biggest reasons for all our continued fiscal problems is the blind inability of the people to take some responsibility for their country's finances and self induced debts. Rash and greedy lending by the banks to rash and greedy borrowers started all this. without the rash and greedy borrowers the rash and greedy banks would have had noone to lend to. Add to that rash spending by Govts and rash acceptance of that poorly thought through fiscal agenda by the electorate and we arrive at ................austerity caused to a lesser or greater extent by us all. As I said the debts belong to the nations that incurred them!

June 15 2012 at 8:37 AM Report abuse Permalink rate up rate down Reply

1 reply to majdf18148's comment

The debt belongs to the Greek Government, not the people, just as our Government borrowed and saddled us with the debt (not our debt). I agree that the Greeks are not the best taxpayers and the public sector does not take responsibility but Governments don't run the countries, banks do.

All major countries have deficits. Pay off the deficit and you deplete the money supply. Every £,$ Euro is borrowed into existence. It won't change unless you change the debt based banking system because the IMF, Bank of England and the FED etc are all private banks making the maximum profit from the use of other peoples money.

June 15 2012 at 2:04 PM Report abuse Permalink rate up rate down

archieandteach

Carry on Greece and make your own way in the world. Do not listen to Osborne, he cannot even sort out this countries problems. If you leave the EU it may prompt others to follow and end the fourth reich. Good luck.

June 15 2012 at 5:14 AM Report abuse Permalink +2 rate up rate down Reply

michaeloleary

This is an ongoing mantra. The situation requires a greater and stronger fiscal control in cooperation with the other european bodies. That does not mean that there should be greater political unity. Quite the oposite. Less political interference and more constructive legistation is required. Europe was engaged in a 'world' war more than once to prevent German domination yet the politicians of today forget that and rush headlong into the German financial Empire.
Has Cameron returned from Munich waving a white promisery note yet?

June 15 2012 at 4:54 AM Report abuse Permalink +2 rate up rate down Reply