Britain's Osborne urges Europe to 'put house in order'

6th January 2011, Comments 0 comments

Britain's finance minister George Osborne on Thursday urged Europe to "put its own house in order" in 2011 by taking action to restore confidence in the euro and shore up the bloc's banking system.

Writing in the Financial Times newspaper, Osborne called on eurozone countries to be more bold in responding to their financial woes and said a convincing package of measures early this year was an urgent requirement.

"On deficits, growth and banks, 2011 is the year Europe must put its own house in order," said Osborne, ahead of an economic conference in Paris.

"The sense of crisis may have eased, but wide spreads and high market interest rates still stalk several European economies," he said, urging a "comprehensive package early this year."

The International Monetary Fund or other external bodies should be brought in to give credibility to new stress tests for European banks, he said, after the stringency of the last tests was called into question by the markets.

Of 91 European banks tested in July, only seven -- five in Spain, one in Germany and one in Greece -- were found to be vulnerable to economic stress.

Bank of Ireland and Allied Irish Banks also passed the exams, only to be propped up by the state a few months later in a move that helped push Dublin into needing an 85-billion-euro rescue package from the European Union and IMF.

"European cannot repeat the same mistake again," said the finance minister, referring to the last round of tests.

"We should look at ways of strengthening the credibility of these tests, including validation by bodies such as the International Monetary Fund."

Osborne also vowed to maintain Britain's leading global role in financial services, cautioning against "badly thought through regulation" from Brussels that could hurt European financial centres.

"No one should doubt that Britain is determined to remain a global financial centre serving Europe and the world," he said.

© 2011 AFP

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