PM: Urgent action needed on eurozone but UK won’t underwrite debts

DAVID Cameron has warned that “urgent action is needed” over the eurozone crisis, after he held crunch talks yesterday in Berlin with German chancellor Angela Merkel.

The Prime Minister claimed further integration was crucial for the euro’s stability, but insisted that the UK government would not ask British taxpayers to underwrite the debts of ailing banks in Greece and Spain.

The talks between the UK and German leaders came amid mounting pressure on Europe’s leaders to resolve the crisis, with a rerun of Greek elections on 17 June to be followed by summits of the G20 group of nations in Mexico and the European Council in Brussels.

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Mr Cameron, speaking at a media conference with Mrs Merkel, said he wanted the euro to succeed, but insisted the UK would not be part of further integration seen as necessary to help it continue.

He said: “I have no doubt that the single currency countries will want to seek greater integration. That is clearly going to happen over the coming months and years. Britain is not in the single currency, we won’t be joining the single currency, so we won’t take part in that integration, but we know it is necessary for the single currency to deal with these issues, so that it will work properly in the future.”

Meanwhile, Mrs Merkel made it clear that she believed the creation of eurobonds, which would allow eurozone nations to share the burden of debts, would have to come as part of closer banking and fiscal union between single-currency states.

But she said this did not mean a two-tier Europe, pointing out that Britain and other countries had held back from previous measures of integration while remaining full members of the European Union.

The talks in Berlin came after the Prime Minister and US president Barack Obama agreed that an “immediate plan” was needed to restore stability and market confidence in the euro.

Mr Cameron said: “Urgent action is needed to deal with the market uncertainty. I am pressing the case for action to solve the financial crisis, to recapitalise the banks, build the big firewall, get growth going in Europe through structural reform and make sure there are clear and credible plans to deal with deficits.”

The Prime Minister, who later described his talks with Mrs Merkel as “positive”, also voiced his strong opposition to a Europe-wide financial transactions tax.