Britain urges swift eurozone debt action

10th October 2011, Comments 0 comments

British Prime Minister David Cameron on Monday warned that "time was short" for eurozone leaders bidding to solve a debt crisis that has forced a fresh huge bailout of Franco-Belgian lender Dexia.

Cameron's comments came in an interview with the Financial Times (FT) and as the prime minister spoke on Monday with US President Barack Obama on how best to solve the eurozone debt crisis.

British finance minister George Osborne told parliament that the leaders had spoken to each other a day after German Chancellor Angela Merkel and French President Nicolas Sarkozy vowed a response to the crisis within weeks.

Speaking to the FT, Cameron called on Germany to accept the "collective responsibility" of the euro project and beef up the zone's 440-billion-euro ($589-billion) bailout fund.

Cameron added that he did not accept a Greek default was inevitable, but admitted that many of his government's ministers believed it was.

To deal with the "precarious" situation, only swift and drastic action would keep the eurozone's fate out of the hands of the market, Cameron said.

Osborne meanwhile told Britain's parliament that the economy needed "a comprehensive solution that puts" the eurozone -- Britain's largest trading market -- "on a much more stable footing."

He added: "We need a comprehensive solution which ring-fences vulnerable eurozone countries, recapitalises Europe's banks and resolves the uncertainty about Greece (...) First we need to see the eurozone members increase the firepower of their bailout fund.

"If you're trying to protect larger countries, then 440 billion euros is sadly not enough," Osborne said.

Belgium, France and Luxembourg on Monday decided to dismantle Dexia, the first bank to fall in Europe's debt crisis, as the eurozone prepared a battle-plan to protect its banking system.

It was the second time in three years that Dexia needed to be rescued. This time, Belgium agreed after board and cabinet meetings to pay 4.0 billion euros to nationalise Dexia's domestic consumer-lending unit.

The dismantling of one of the largest lenders in France and Belgium only three months after it passed European stress tests brought the banking crisis from the continent's Mediterranean periphery right to its economic heart.

"The European bank stress tests have not nearly been tough enough as proved by the fact that Dexia did not fail them," Osborne added on Monday.

© 2011 AFP

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