Eurozone instability 'greatest threat' to recovery: Clegg
Economic sluggishness and instability in the eurozone is the "greatest threat" to Britain's own economic recovery, British Deputy Prime Minister Nick Clegg said on Friday during a visit to Spain.
"Our economies are interwined. Other EU countries are the UK's biggest trading partnets by some distance -- around half of all our exports go to the EU and over half our inward investment comes from there," he said.
"That means that economic and financial difficulties in the eurozone directly affect Britain. Indeed continuing instability and a lack of growth on our doorstep is the greatest threat to our own economic recovery.
"Quite simply slow growth in the eurozone means fewer British exports, slower British growth, fewer British jobs," he told an conference in Madrid.
Clegg said that the 27-nation European Union could boost economic growth by "fully" implementing existing single market legislation and extending the single market to new areas such as the digital economy.
"The economic gains from full implementation of the single market are estimated to be worth over two percent of EU GDP," he said.
British economic growth picked up to 0.3 percent in the first quarter as a weaker pound helped exports but there are concerns that any overly drastic spending cuts could jeopardise the gains and tip back into recession.
But Clegg said although reducing Britain's deficit was the British government's "number one priority", it was "vital that we protect and promote sources of growth."
"We are making cuts because that is the only option we have to ensure the future prosperity and stability of our country. If there was another, less painful option, we would take it," he added.
Official data last week showed the deficit had hit 156.1 billion pounds in 2009/2010, or 11.1 percent of gross domestic product (GDP) -- lower than the previous estimate of 163.4 billion pounds, but still a record high level.
© 2010 AFP