The risks to Britain from a disorderly collapse of the euro zone are huge and Greece has to make up its mind over its membership of the zone, finance minister George Osborne said on Thursday.
In comments likely to stir up resentment on the continent, where euro zone leaders are fed up with what they see as an obstructive Britain lecturing from the sidelines, Osborne told the bloc to form a banking union and underwrite its banks.
“A time for decisions has come,» Osborne said in a speech to London’s financiers, arguing that it may take a Greek exit from the euro to shock euro zone leaders into taking the necessary action to end the crisis.
“If exit is the chosen route then the euro zone must have a very good plan in place to prevent contagion. The worst case for everyone would be exit without a sufficiently ambitious response.”
“The risks for our economy from a disorderly collapse of the euro are huge,» he warned, just three days before Greek voters go to the polls to pick another government in an election seen as a referendum on membership of the euro zone.
Britain has consistently blamed the euro crisis for its own economic woes – the economy is mired in its second recession in four years – although critics say the government’s own strict austerity program has killed off a weak recovery.
Scolding Europe is a vote winner in Britain – the biggest European economy outside the euro zone – and plays well within Osborne’s Conservative Party, which is worried about losing votes to more eurosceptic parties in the 2015 election.
Osborne called for Europe’s strongest economies, such as Germany, to do more to help those on the brink; a pooling of resources via euro bonds; closer collective oversight of fiscal and financial policy and a backstop for the euro zone’s banks.
“It’s not in our interests to stand in the way of the further integration amongst euro zone countries … that includes proposals for a banking union,» he said, calling it a natural consequence of a single currency.
“We are clear that Britain will not take part in this banking union. British taxpayers will not stand behind euro zone banks, and British voters want the British authorities to be in charge of supervising our own banks.”
Osborne repeated Britain’s demands for safeguards, especially in financial services, against any risk of euro zone countries being able to force their will on other European Union members.