Brown urges fivefold increase in eurozone fund
The eurozone needs a rescue fund of about two trillion euros -- almost five times its current size -- to overcome its crisis, former British Prime Minister Gordon Brown said Wednesday.
His comments come just hours after Slovakian lawmakers voted against an expansion of the European Financial Stability Facility, raising concerns over European leaders' chances of finding a solution to the crippling debt saga.
"The European stability fund is only (about) 400 billion euros...most people like me believe the fund that is needed to withstand the pressure is more in the order of two trillion euros ($2.7 trillion)," he told a Seoul forum.
"Therefore we have to find solutions to that problem...even at a time when European countries are not willing to vote for a bigger rescue fund."
Brown, who as finance minister kept his country out of the eurozone, said Britain had refused to sign up due to a lack of "proper measures... to avoid the crisis we now have."
He said he did not think the single currency would survive "in the present form" but only through closer fiscal cooperation.
Slovakia's lawmakers on Tuesday rejected an expansion of the 440-billion-euro EFSF.
The move effectively blocks European Union moves to revamp the bailout fund as they try to prevent a Greek debt default from spreading to other economies and banks, which many fear could lead to another financial downturn.
Brown called for a greater role for the Group of 20 advanced and emerging economies in tackling the economic crises in Europe and the United States, which could also dent growth in emerging markets.
Seeking lending from China and rich oil states to strengthen the eurozone rescue fund would be helpful, he said in a speech at the World Knowledge Forum hosted by Maeil Business Newspaper.
Brown also called for greater long-term global efforts to boost demand in the US and Europe.
They were being "out-produced, out-exported and out-manufactured" by emerging markets whose production largely depended on demand from a relatively small population in advanced economies.
"If Europe is not growing over the next few years, the rest of the world will suffer," Brown said.
The world needed a global growth pact to open up emerging markets to foreign exports and investment, to increase infrastructure spending and cut fiscal deficits in the US and European Union, he said.
"If we could have that self-reinforcing cycle of growth, then I believe we could have a new confidence about moving forward."
© 2011 AFP