UK Politics

PM: UK prepares for every eventuality over euro

David Cameron

David Cameron is calling on eurozone leaders to "act now" to save the single currency, while stressing the UK was "preparing for every eventuality".

He told business leaders it was not in Britain's interest to see the eurozone break up but the government had to make sure the UK came "through the storm".

The prime minister also warned the debt crisis in Italy and problems in Greece could seriously affect the UK economy.

Labour leader Ed Miliband called for an urgent summit to deal with the issues.

It comes as next year's growth forecast for the eurozone was drastically cut, from 1.8% down to just 0.5%, amid warnings of the risk of a new recession for Europe.

Meanwhile, financial markets have been jittery as worries persist about the high cost of borrowing faced by Italy. On Thursday, Italy raised 5bn euros from a new issue of bonds, but had to pay an interest rate of 6.087% to borrow the money for one year.

In Greece, there were hopes that the appointment of a new prime minister - the former European Central Bank vice-president Lucas Papademos - would provide stability to get them through their debt crisis.

'Unite or face irrelevance'

In his speech about export growth in central London, Mr Cameron said: "If the leaders of the eurozone want to save their currency, they and the eurozone institutions must act now together, because the longer they delay, the greater the danger.

"Our economy faces new difficulties, people are desperately worried about their jobs. Businesses are feeling the strain. We have got to make sure we come safely through the storm."

Responding to reports about a possible break-up of the euro or intervention by the ECB as a "bank of last resort", Mr Cameron said the government was "preparing for every eventuality".

The Treasury has been looking at how to mitigate risk and carrying out contingency planning, the PM's spokesman said later.

Mr Cameron said: "It is not in our interest for the eurozone to break up, for countries to leave the eurozone - that obviously affects our banks, it affects our neighbours' banks, transmission mechanisms that would go right across Europe, that would damage our economy."

His remarks come as European Commission President Jose Manuel Barroso urged for the EU to "unite or face irrelevance" and asked "responsible leaders" to go out and make the case for Europe.

"This continent is simply too small and too inter-dependent for us to stand apart, to turn our backs to each other," he said.

Mr Miliband criticised the prime minister's handling of the "biggest economic crisis of our lifetime", saying he had left Britain adrift.

"He has chosen to lecture from the sidelines, not only out of touch but dangerously complacent as the crisis threatens the jobs of thousands.

"His refusal to take a lead is an abdication of responsibility. He must act today.

"We need an immediate European Council this weekend - the UK government should demand one. That meeting must not be allowed to break up until a comprehensive solution has been put in place for the crisis."

The prime minister's spokesman said it was "not a question of more meetings, it was a question of more action", and pointed out that the eurozone has to implement the package agreed at the recent G20 summit.

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