EU leaders must “get a grip” on debt crisis: Osborne

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Britain’s finance minister urged euro zone leaders to “get a grip” on the debt crisis when they meet in Brussels to discuss a solution to Greece’s woes, the Financial Times reported.

In an interview with the FT published on Thursday, George Osborne warned that failure could result in an economic crisis as serious as the recession that followed 2008’s banking crash.

He told the newspaper he was “very worried” about the possibility of the euro zone crisis spiraling out of control and cautioned that it posed an additional threat to the UK’s already “tough” economic situation, Reuters reports.
“We see the potential for a set of economic events that could be as damaging as 2008,” he said in the interview.

Osborne said he was optimistic that European Union leaders would make progress getting private investors to contribute to the cost of Greece’s bailout. But he said this was only the first step toward a necessary fiscal union in the euro zone.

The FT said the British chancellor recognized that his enthusiasm for greater euro zone integration was a reversal of British policy, which had originally aimed to frustrate the creation of a two-speed Europe.

For Osborne, “the remorseless logic” of monetary union was greater fiscal union, the newspaper quoted him as saying.

Osborne last called for euro zone leaders to take “decisive action” to resolve the crisis on July 12 at a EU meeting, marking a move away from Britain’s past position on the sidelines as the debt crisis escalated.

In the interview, Osborne called for greater economic integration in the single currency bloc and said that the idea of euro zone bonds was “worthy of serious consideration.”

However, he argued that the loss of sovereignty implied by solutions such as eurobonds justified the UK’s refusal to join the euro.

He also called for private sector bond holders to share the burden and for the euro zone’s bailout facility to be expanded to include the purchase of Greek bonds.

However, Osborne added that Britain would not take part in any euro zone solution.
“Britain’s taxpayers stand behind the pound. Europe’s tax payers are going to have to stand behind the euro,” he said.

Osborne also insisted that there would be no retreat on deep government spending cuts, but said the UK was carrying some “heavy weights” as it recovers from the last recession.