French PM seeks to convince UK on euro support

13th January 2011, Comments 0 comments

France's prime minister tried Thursday to reassure Britain about plans for greater "harmonisation" in the eurozone as his British counterpart ruled out joining any new bailout mechanisms.

Prime Minister Francois Fillon said his country and fellow European Union powerhouse Germany were prepared "to do everything, absolutely everything" to ensure the stability of the single European currency.

"Of this there must never be any doubt: euro area states, and especially France and Germany, are ready to do everything, absolutely everything, to ensure the euro area's stability," Fillon said in a speech to business leaders.

"The euro area is Europe's monetary heart, and no one should have any doubt about the determination of the whole European Union to safeguard it.

"It's an absolute political and economic priority."

His comments come amid investor unease that Portugal will soon become the third economy in the 17-country eurozone to require a bailout after Greece and Ireland were forced to accept multi-billion-euro rescues loans last year.

Some analysts fear that the problems could spread to the larger economies of Spain and Italy.

Despite those concerns, the euro enjoyed a good day on Thursday, jumping above 1.33 dollars on the back of a successful European bond auctions and poor US economic data.

In an interview with The Times ahead of his visit, Fillon said he would be urging British Prime Minister David Cameron to back deeper European integration to shore up the euro or risk disaster in his own economy if the currency fails.

Speaking at a news conference after their meeting, Fillon said eurozone "harmonisation" would increase but he understood that the "British want to remain British".

"I've asked the UK to look at the arguments for harmonisation in a favourable light," he said.

Cameron said that while Britain would never abandon the pound and adopt the euro under his leadership, it recognised that a strong eurozone was key to its economic interests.

However, he stressed that did not mean that Britain was prepared to join any new agreements to bail out indebted eurozone countries.

"A strong and successful eurozone is in Britain's interest, we want the countries of the eurozone to sort out the difficulties and the problems that they have," Cameron said.

"We won't stand in the way as they do that, indeed we will be a helpful partner to make sure that happens," he added.

"But let me again be clear, that does not mean that Britain should be drawn into new mechanisms or new procedures or have to give up new powers."

Fillon hailed Britain's actions during the euro crisis, pointing to its role as a major contributor to the international bailout of Ireland after the former 'Celtic Tiger' economy sank deep into debt following a banking sector crisis.

"I want to tell you that, throughout this crisis, the British authorities have been solid partners, respecting our differences," Fillon said.

Portugal was cheered on Wednesday after pulling off a successful bond sale worth 1.25 billion euros (1.6 billion dollars), saying it had passed a key test of its credit standing on the international markets.

But analysts struck a cautious note, insisting that a bailout remained a genuine possibility.

Spain succeeded on Thursday in reaching its maximum 3.0-billion-euro target in a five-year bond sale, but analysts warned it did not signal an end to the country's debt woes.

EU President Herman Van Rompuy, also visiting London Thursday, defended the idea of greater economic convergence between eurozone countries as a way of bolstering the single currency following the global financial crisis.

"The countries of the eurozone, of course, must work even more closely together than the others: after all, they do not just share a market, but also a currency," Van Rompuy told a European business lobby group.

© 2011 AFP

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