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Euro-zone - Part 3
6 years ago

Merkel: Eurozone must avoid Greek exit

German Chancellor Angela Merkel told Newsnight's Gavin Esler that the Eurozone must hold together   [Video]


German Chancellor Angela Merkel has told the BBC it would be a huge political mistake if debt-stricken Greece was allowed to leave the euro.


In an exclusive Newsnight interview, she said Germany would do everything it could to keep the eurozone together.


She also calmed fears of further bailouts for eurozone countries, saying important lessons had been learned.


And she applauded the UK government's austerity programme, saying "no country can live beyond its means".


Greece recently won approval for a second bailout of 130bn euros ($173bn; £110bn) intended to help keep it afloat until 2014.


Germany is having to pay more than any other country for the package - angering many German citizens and politicians.


Despite the measures, some analysts fear Greece might need even more help.


Political unity

Asked how she saw the future for Greece, Mrs Merkel told the BBC's Newsnight programme that Athens had repeatedly said it wanted to remain within the eurozone.


"It has major weaknesses but it is trying to overcome them, be they in the administration or the competitiveness of their business community. It is going to be a long and arduous road," she said.


"We have taken the decision to be in a currency union. This is not only a monetary decision, it is a political one. It would be catastrophic if we were to say to one of those who have decided to be with us: 'We no longer want you'."


She said the eurozone would be "incredibly weakened" by a Greek exit.


"People all over the world would ask: 'Who will be next?'"


She added: "It would be a huge political mistake to allow Greece to leave. That is why we will be clear with Greece, we will say: 'If you want to be part of a common currency you have to do your homework but at the same time we will always support you.'"


Mrs Merkel said democracies had grown used to spending more than they earned, and had to be more careful to live within their means.


Asked to respond to those in Europe who feared further bailouts she said: "That is not how it is going to happen because there has been a rethink going on in Europe for some time.


"Some countries accepted the rescue package but they don't particularly relish it. They must follow conditions set out by the IMF, the ECB and the European Commission. What democratic government wants to be in that situation for the duration?






6 years ago

"Over the past two years in Europe, particularly in the eurozone, we have learnt a lot. We must reflect time and again, why are we together in Europe? Why are we a community that displays solidarity and bears responsibility for the others?"

Angela Merkel told Newsnight's Gavin Esler that Britain must decide how much it wants be part of Europe  [VIDEO]


Mrs Merkel said Europe - and particularly the eurozone area - had "slithered into crisis" as a consequence of a global financial downturn.


"It is a very tense situation right now," she said.


She said she believed that UK Prime Minister David Cameron "was right" to have embarked on an austerity drive.


"It is something that each country in Europe can do because we will all learn that no country can live beyond its means," she said.


"All European countries have understood this lesson. But we in the eurozone are convinced that together, we are so much stronger."


'Common ground'


Asked if she could envisage the UK playing a bigger role in Europe than it does now, she said: "Britain plays a very important role in Europe.


"Britain has a lot of common ground with Germany on how we see the future of free global trade, we all benefit from it.


"At the end of the day the British have to decide for themselves to what extent they wish to be part of Europe.


"It is a discussion that we have seen unfortunately taking a painful turn on the [recently agreed] fiscal compact but Britain needs to know that we in Germany want a strong Britain in the EU, we always have and we always will."


She added: "In Germany we will try to see that there is less red tape, more political decisions and more transparency. I think that we are at one on this with Britain."


Watch the full interview with Angela Merkel on Newsnight on Monday 26 March 2012 at 10.30pm on BBC Two, then afterwards on the BBC iPlayer and Newsnight website.





Related Threads
Spain budget: Cuts to total 27bn euros this year
6 years ago

30 March 2012 Last updated at 18:32


Spain budget: Cuts to total 27bn euros this year


Spain is cutting 27bn euros ($36bn; £22.5bn) from its budget this year as part of one of the toughest austerity drives in its history.


Changes will include freezing public sector workers' salaries and reducing departmental budgets by 16.9%.


The government says it will raise 12.3bn euros this year, aided by an increase in tax for large companies.


Deputy Prime Minister Soraya Saenz de Santamaria said the nation was in an "extreme situation".


"Our top priority is to clean up public accounts," she said. "This is a moment that demands serious efforts to reduce spending but also structural reforms to cause the economy to grow and create jobs."


But economists are questioning whether the cuts will be enough to satisfy Spain's European partners.


'Insufficient' cuts


Last month Prime Minister Mariano Rajoy agreed with the European Commission to reduce Spain's deficit from 8.5% to 5.3% of GDP in 2012. Javier Diaz Gimenez, professor of economics at IESE Business School in Madrid, said: "This [budget] seems to be non-credible.


"They will not be making the 5.3% target agreed with Brussels, because the cuts are insufficient given the growth forecast," he told BBC News. This could mean further cuts are needed before long.


"I suspect that the government could be forced to implement further austerity measures later this year, with lingering economic downturn set to place additional strains on an already perilous budget deficit reduction plan," said Raj Badiani, an economist at IHS Global Insight.


The main risk is that the government's tax revenue projections for 2012 look too optimistic," he said. There are concerns, however, that even the latest spending cuts could further damage the chances of getting the Spanish economy growing again. It is in recession and is expected to shrink by 1.7% this year.
Soraya Saenz de Santamaria said this would not happen. "Our obligation towards Spanish people and the rest of the EU citizens is to get public accounts into shape," she said. "Not at any cost, but with measures that support those citizens who need it the most and not paralysing a possible recovery or job creation."
Budgets slashed
Under the 2012 budget the unemployed will see their benefits maintained and pensions will continue to rise. Consumers have also been spared some pain as VAT will remain at its current level.


But they can expect higher living costs as Energy Minister Jose Manuel Soria announced a 7% rise in electricity bills and 5% rise gas bills from 1 April.


The government is also going ahead with a previously-announced increase in income tax by 1.9%. The 27bn euros of cuts is equivalent to 2.5% of the country's economic output.


Amongst government ministries, the big losers are the foreign office, whose budget has been halved. Industry, energy and tourism will get a 32% cut, while the public works budget will be slashed by 34%.


More details will be published next Tuesday when the budget goes before Parliament. It is expected to be passed formally in June.




This post was modified from its original form on 30 Mar, 22:02
6 years ago

'Not yielding'

On Thursday, police clashed with demonstrators as hundreds of thousands swamped the streets in Barcelona and other cities.

Unions said 800,000 people joined the protest in Barcelona. Police put the number at 80,000.

Spanish protesters
Planned labour market reforms have proved deeply unpopular in Spain

Some marchers in the city smashed windows and set rubbish bins alight. Police fired tear gas and shot rubber bullets at the ground, TV pictures showed.


In the capital, Madrid, unions said about 900,000 people took part. The government did not give a figure.


The BBC's Europe editor, Gavin Hewitt, says the size of the demonstrations on Thursday were an indication that many are losing patience with austerity.


Unemployment in Spain is currently the highest in the EU at 24%. Nearly half of Spain's under-25s are out of work.


The general strike was the government's first big challenge since Mariano Rajoy took office after elections last November.


Despite the opposition, the government says it is committed to reining in its spending.


"The question here is not whether the strike is honoured by many or few, but rather whether we get out of the crisis," Mr Montoro said.


"That is what is at stake, and the government is not going to yield."


Bailout fears


Separately, eurozone ministers have agreed the expansion of Europe's bailout reserves.


The ministers, meeting in Copenhagen, have decided to boost the joint lending power of the "firewall" to 800bn euros.


Investors - worried about a bailout for Spain or Italy - wanted the fund to increase from its current size of about 500bn euros to closer to 1 trillion euros. But there was resistance from Germany to an increase of that scale.


A government minister said Spain needed to tighten up its finances to meet EU targets for reducing deficits without stifling economic growth and job creation.

That is the challenge.


Privately some in government accept these calculations involve a risk.

The economy is in recession and some predict it will shrink by around 2% this year - even before these savings are made.


The fear is that Spain could be tipped into a downward spiral.


Thurrock poll 'backs EU referendum'
6 years ago

Thurrock poll 'backs EU referendum'

EU flag
Leaders of the UK's three largest parties have rejected calls for an EU referendum

Related Stories

Nearly 90% of those who voted in a public poll over Britain's membership of the EU have backed calls to stage a referendum, campaigners say.


Some 14,590 people in Thurrock, Essex, returned postal ballot papers or voted electronically - a 30% turnout - said cross-party group People's Pledge.


Of those, 13,111 said there should be a referendum on the issue.


The results are not binding. Ministers have pledged a referendum - but only if further powers pass to Brussels.


People's Pledge plans another 11 similar votes, conducted by Electoral Reform Services, across the UK this year.


'Heads in sand'


Pledge director Ian McKenzie said the Thurrock result indicated Westminster parties should rethink their attitude on a national referendum.


"Heads in sand is no longer a viable strategy," he said.


The People's Pledge campaign has been backed by numerous Conservative and Unionist eurosceptics.


And Labour figures like eurosceptic Natasha Engel and pro-European Keith Vaz have also given their backing.


The leadership of the UK's three biggest parties in Westminster have rejected calls for a public vote on EU membership.


Last year, the House of Commons supported that view but only after 81 Conservatives, 19 Labour and one Liberal Democrat MP rebelled.



Eurozone crisis: Why it may not be over yet
6 years ago

6 years ago

But, interestingly, there is NOT much sign that banks from other parts of Europe or the world's institutional investors have gone back to buying sovereign debt in a big way. The latest figures, for February, show that sovereign holdings by German banks, for example, have fallen slightly since November, while holdings by Spanish banks have risen by 68bn euros (£56bn; $89bn).


Nor is there much sign that the cheap liquidity, or the cuts in the official ECB policy rate, have filtered through to households and companies in the countries that need it most. As Marchel Alexandrovich from Jefferies, has pointed out, mortgage rates in Spain and Portugal are higher now than they were at the start of 2011 - half a percentage point higher in the case of Portugal, despite ECB rate cuts.


Outside the financial sector, companies are also paying more to borrow in these countries: borrowing costs for ordinary businesses have risen by 1.4 percentage points in Portugal and 0.8 percentage points in Italy.



It's really too soon to judge the full effect of the ECB's actions on the amount of credit flowing through these economies. Monetary policy takes time to feed through to the real economy, at the best of times. But we can say they haven't seen much of an upside yet.


Talk of further rounds of fiscal austerity in Spain and the others does not help the situation. Nor do the latest jitters about the US economy - and China. (Though, when it comes to the US, the fundamentals do look better than they did this time last year, when the strength seen in the first few months of 2011 started to evaporate.)


Not so crazy

The second reason why the "squeak by" scenario for the eurozone now looks more difficult is a sudden outbreak of politics.


I say sudden. It's not exactly news that France and Greece are about to have important elections. But it is scary, for international investors. Or ought to be, when so few of the ingredients of a lasting solution to the Eurozone crisis are in place.


Like it or not, the Greek election, which we now know will happen on 6 May, will revive questions about whether Greece can stick with its new programme - or, indeed, the euro. But the election in France on the same day could prove more consequential.


Why? Because a victory for Francois Hollande in France would re-open the entire debate about austerity and growth, right at the heart of Europe.


The very phrase, President Hollande, could also (whisper it softly) cause investors to wonder whether France - the country with by far the highest government spending as a share of GDP in the eurozone - deserved to be borrowing at less than 3%.


We know what Nicolas Sarkozy thinks about fiscal austerity: he's in favour, at least when it comes to countries that aren't France. It's harder to predict where M Hollande will stand the next time that Spain decides to revise its deficit targets. Or what the German Chancellor will say in response.


We do know how investors are likely to react in the face of further arguments about the future direction of the eurozone, not to mention to further downward revisions to most European economic forecasts.


All of which is to say, those crazy financial markets may be on to something. I don't think the eurozone crisis is over, either. Spring fever in the eurozone


Page 2



6 years ago

I have to admit I do not understand much of this Ray.  Biggest thing I do not understand is why they decided to go with a Euro - a common currency.  It did not sound like a good idea to me at the time.


I know if there was ever a thought to join our North America currency I would fight it to the death.  We need to stand on our own.

6 years ago

Cam, it was always going to be wrong for Europe due to the smaller countries not being able to stand up on their own financially.   Thankfully, England didn't go for it.


Alot is going on across the pond and Ray keeps us up to date.   There is a direct correlation between what is happening there and here in the states.   Isn't it great to be able to come to Political Derby and get a lesson in the issues other countries are facing, too?   Like you, I have to admit, before Ray's information, I was oblivious to what was going on over there.


Likewise, our Canadian friends have their own issues and it's important that we all stay on top of new developments and old which have failed.   Our country can learn alot just by paying attention.

6 years ago

Ray, keep it coming.  Thank goodness England is not buying into this.  Cam, we do need to be more educated on Canadian matters, as well.  So between you and Ray, you can add so much to our knowledge; so much of what happens to one of the three Countries impacts the other two; we are tied closer than we sometimes realize.  


Just throwing out something here to consider.  The topic came up about Hillary Clinton being a VP.  I don't believe it will happen as she is after the ultimate prize and that is President of the World Bank; she is one of two names submitted for this.  The time as Secretary of State has done a lot to prepare her for this.  So, when we discuss the Euro and why that one currency (common currency), because that is the goal of the New World Order, one world currency used by the entire world and what better position to be in to push for this, President of the World Bank.  The Clintons have been New World Order people all along and that is George Soros goal and why they have all become so close.  That is also why I believe Hillary bowed out of the Presidential election in 2008 when she did; they had a much better place for her and a bigger goal for her, too.

6 years ago

Big green stars for Linda and Ray    


Ray, look at California in the US.....they are bankrupt...the largest state by population in the US.....bankrupt.   Why you ask?   The bleeding heart liberals who believe every person with a heartbeat and a pulse deserves what everyone has irrespective if they can pay for it or not....and, please, being  legal doesn't matter.....illegal alients welcome.   Show me where that works.   It doesn't.   California needs to become a country because we only need 49 states who are paying their bills.   California is down the tubes as far as I am concerned.   Which brings me to those countries in your neck of the woods who can't balance a budget due to massive entitlement has to bottom out at some point because other countries are sick and tired of propping other countries up...rewarding them with bailouts for absolutely poor financial decisions.


Belly up, some point.....time to kick the euro to the curb.   AND, in the US, time to kick spreading the wealth to the's not going to work.   We are a personal responsibility country.   Of course, you wouldn't know that today with President Obama known as the "food stamp President."   He likes having Americans look to him for their daily sustenance.   Obama gets "off" on that.

6 years ago

Cam, I am very sorry, I have not responded to your kind post, this was due to problems with my internet connection, however, this has now been corrected and I will be responding to your post very shortly, but first I need to post an update to this thread, I will then refer to the thread so that you may have a better understanding and the position that Britain holds in the EU.

6 years ago

Back, Ray.  It is wonderful to have you back with us.  

Lord Heseltine says UK will join the euro
6 years ago

17 April 2012 Last updated at 15:36


Lord Heseltine says UK will join the euro

The former Deputy Prime Minister Michael Heseltine says the UK will join the euro one day

Conservative peer and former deputy prime minister Lord Heseltine has told the BBC that he thinks the UK will join the euro "if it survives".


The pro-European politician, recently appointed as a government adviser, told the Daily Politics Britain had "failed" to resist European integration.


Lord Heseltine said European countries would "cling on" to the euro.


The eurozone faced a "crisis" but he said it was a "very Eurosceptic view" to see the euro as a "failed project".


Asked if he thought the UK would adopt the single currency, he said: "If it survives, and my guess is it will survive, my guess is in the future - it won't be this week or next week or next year - we will do so, because the whole process of Europeanisation we have resisted and we have failed at every turn.


"If you look at the history of it, we were asked to lead it and we refused."


The peer served as a cabinet minister in the 1980s before resigning and later challenging Margaret Thatcher for the Conservative leadership - a challenge that triggered the end of her premiership in 1990.


Lord Heseltine, who was also deputy prime minister during the latter part of John Major's time in Downing Street, said: "Every time we've had these arguments... it's always turned out to be unworkable from our point of view."


David Cameron said last December there was "absolutely no prospect of joining the euro" while he was prime minister.


Deputy Prime Minister Nick Clegg, whose Lib Dems are the most pro-European of the three largest UK parties, said in September he thought it was very unlikely that "we will see this country entering the euro during my political lifetime".


Labour leader Ed Miliband told the BBC last year he thought joining the euro would be "very, very unlikely... I don't think it's going to happen... I can't see it in the foreseeable future".

6 years ago

 from me, too!!

6 years ago



To give you a better understanding, I must go back in time to go forward, in 1990 the Prime Minister  Thatcher made a statement in the House of Commons, in her statement she was setting down Britain’s stands and what Britain would allow and what Britain would not allow in the EU and how we stand in relation to the single currency.


Please Note:  when reading the speech, Prime Minister Thatcher was addressing  all Parties in House of Commons,  

Margaret Thatcher: “No, No, No!” (1990)

Margaret Thatcher, leader of the Conservative Party and British Prime Minister from 1979-1990,gave this speech in the House of Parliament on October 30, 1990 rejecting moves toward a more closely united Europe.


The video is edited. A full transcript can be found on the website, and a full 30-minute video of the speech here, on the same site.


Margaret Thatcher: Yes, the Commission does want to increase its powers. Yes, it is a non-elected body and I do not want the Commission to increase its powers at the expense of the House, so of course we are differing. Of course…

The President of the Commission, Mr. Delores, said at a press conference the other day that he wanted the European Parliament to be the democratic body of the Community, he wanted the Commission to be the Executive and he wanted the Council of Ministers to be the Senate. No. No. No.


Or…. or…..or…..

Perhaps the Labour party would give all those things up easily. Perhaps it would agree to a single currency, to total abolition of the pound sterling. Perhaps, being totally incompetent with monetary matters, they’d be only too delighted to hand over full responsibility as they did to the IMF, to a central bank. The fact is they have no competence on money and no competence on the economy—so, yes, the right hon. Gentleman would be glad to hand it all over. What is the point in trying to get elected to Parliament only to hand over your sterling and the powers of this House to Europe?


Please Note:  Video from the BBC Margaret Thatcher: “No, No, No!”



Had Labour or the Lib-Dem's been in power, Britain would have been in the same position as Greece as we see tooday, this we know, we would be facing not a recession but a depression worse than 1930's


 I like many other Brits are of the opinion, that the EU want a (USE) United States of Europe, Thatcher Speech put the stops to Britain having any part of the (USE) United States of Europe as like the U.S.A., this would in my opinion lead to an unhealthy world ecommony.


David Cameron clearly stated a few months ago, UK will not join euro currency while I am PM in a vote on the treaty of EU, David Cameron vetoes EU treaty change this was due too David Cameron has vetoed a change to the EU treaty designed to resolve the Eurozone debt crisis, saying it would not protect Britain's interests.


with Cameron veto the vote on changes to the EU Treaty, no changes can take place. 

This post was modified from its original form on 18 Apr, 13:35
6 years ago

The British Public was in full surpport of Cameron veto, however, other Political Parties  Been Labour and Lib-Dem's was against such veto, as they said it would damage the UK, due too the Jobs that been in the EU bring to the UK, indeed been in the EU does bring jobs in to the UK, however, the EU also bringing in Immigrants not for work but to bleed the British Welfare Benefit System and the NHS in so much so that Cameron is requesting Changes to the European Human Rights and to bring in a British Bill of Rights 


My own opinion, we should not have even join the EU in the early 1970's, the EU needs to scrapped and so does the the Eurozone, until this is done, the economy will remain in the position it is in today.


I am linking a number of threads inrelation to the Eurozone below.


Eurozone and the World

EU & Eurozone Part 2

Euro's Biggest Losers

Bank of England injects further £75bn into economy


Page 2 

Eurozone 'epicentre' of potential risk, says Lagarde
6 years ago

Eurozone 'epicentre' of potential risk, says Lagarde


The Managing Director of the International Monetary Fund, Christine Lagarde says there is a light economic worldwide recovery underway, but it is threatened by "dark clouds" on the horizon.


Speaking at a press conference at the start of the IMF/World Bank spring meetings Mrs Lagarde had a particular message for Europe.


She told eurozone countries to "keep up" and "implement the reforms that have taken place nationally".



Osborne under pressure to provide extra IMF loans
6 years ago

20 April 2012 Last updated at 11:14

Osborne under pressure to provide extra IMF loans
Sign for IMF World Bank Spring Meetings
George Osborne is in Washington for the IMF and World Bank spring meetings

Chancellor George Osborne is under pressure from the International Monetary Fund (IMF) to provide more loans to help economies in trouble.


Finance ministers from the G20 group of leading economies are meeting in Washington to discuss boosting the IMF's resources.


IMF managing director Christine Lagarde wants to boost her organisation's lending capacity by $400bn (£250bn).


Mr Osborne says any deal on IMF funding will have to be done at a global level.


The IMF has already received commitments of $320bn, including $60bn from Japan.


Brazil wants to have a bigger say in running the IMF in return for a commitment of extra money, while the US is not likely to offer any money because doing so would attract criticism at home in a presidential election year, according to BBC economics correspondent Andrew Walker.


Russia's deputy finance minister Sergei Storchak has said that his country will offer $10bn and that he is confident that the IMF will reach its funding target.


"Trust me that the G20 will announce the final amount," he said.


Committing the extra money does not mean it will actually need to be loaned.


The IMF hopes that if private investors think that countries in trouble can be rescued if necessary, they will be more willing to lend to them and any funding problems will not escalate.


It has already warned that the eurozone's debt crisis poses the biggest threat to the global economy, and warnings about Europe are expected to top the eventual communique from the meetings.


Mr Osborne has some room for manoeuvre because Parliament has previously approved £40bn of loans, of which only £30bn has been committed.


A Treasury spokesperson said: "The UK is a longstanding supporter of the IMF.


"However, we been clear that there are strict conditions under which we would agree to an increase in resources."


These conditions include no funds being specifically earmarked for the eurozone and the participation of other G20 countries.


In a speech made in January, Mr Osborne said: "IMF resources to support individual countries cannot be a substitute for further credible steps by the eurozone to support their currency."


Conservative MP Mark Reckless told the BBC that the eurozone's problems were beyond the IMF's help.


"Countries such as Spain and Portugal are hugely uncompetitive against Germany and until that problem is dealt with... I don't think anything the IMF can do in providing temporary support is really going to help," he said.


But Ngaire Woods, professor of international relations at Oxford University said: "The IMF is the crucial backstop to Europe's own efforts and if Britain isn't going to be part of leading the cooperation with the IMF it's hard to see what Britain's strategy is."


"What we risk is every individual country saying 'we're doing our own austerity' and thereby failing to contribute to a collective solution," she told the BBC.

Should the UK give more to the IMF?
6 years ago

Should the UK give more to the IMF?

George Osborne is facing demands from the International Monetary Fund (IMF) to stump up more cash to help it safeguard countries from the Eurozone debt crisis.


G20 finance ministers and central bankers are meeting in Washington today and the head of the IMF, Christine Lagarde says she wants at least $400bn in global funding to double the organisation's firepower.


Ngaire Woods, professor of International Relations Oxford University, and Mark Reckless, Conservative MP for Rochester and Strood and former economist, discuss whether the UK should contribute more.



Chancellor George Osborne on 10bn loan to IMF
6 years ago

Chancellor George Osborne on £10bn loan to IMF


The Chancellor of the Exchequer George Osborne says the UK is willing to make a loan of slightly less than £10bn to the IMF.


The funds would increase the organisation's resources for lending to countries in financial crisis which include the eurozone, but are not confined to euro countries.


Mr Osborne made the announcement at IMF meetings in Washington.

The Chancellor emphasised the British contribution is part of a global effort and the loan would not add to the UK's debt.



Chancellor George Osborne criticised over UK 10bn IMF loan
6 years ago

Chancellor George Osborne criticised over UK £10bn IMF loan

George Osborne: "It is in Britain's interest that we have a stable and strong world economy" [Video]


Chancellor George Osborne is facing criticism from some Conservative and Labour MPs after pledging nearly £10bn ($15bn) in further UK loans to the IMF.


The money is part of a global effort to boost the International Monetary Fund's capacity to lend to troubled economies, including the eurozone.


But Tory MP Douglas Carswell called the move "IMF bailout bull" and Labour said it was "a sticking plaster response".


Mr Osborne said a "broad body" of Tory opinion backed the UK loan offer.


The IMF says it has received firm commitments of more than $430bn from a number of countries.


The money, pledged at a meeting in Washington, doubles the fund's firepower, which was in danger of becoming overwhelmed by the eurozone crisis.


It can lend that money to other countries in financial stress, with the aim of creating global financial stability and a sounder footing for the world economic recovery.


But the latest UK pledge has proved unpopular with some members of Mr Osborne's Conservative Party, who had been urging him not to sign up to an increase.


Writing on his blog, Mr Carswell said the loan "makes you wonder how all those earlier bailouts have worked out".


Fellow Tory backbencher Peter Bone said the decision was "bonkers" and any efforts to prop up the eurozone were a waste of time.


Responding to criticism from within his own party, Mr Osborne told BBC Radio 4's Today programme: "When you look at the Tory backbench opinion, of course some people have been critical and they have been critical all along, but actually quite a lot of Conservative backbenchers have come out and said this is the necessary and right thing.


"I think there is a broad body of Conservative opinion that understands we are doing the right thing."


The chancellor accused the Labour front bench of adopting an "opportunistic" stance, arguing that they were "people who, in the past, supported the IMF".


Mr Osborne added that the loan was important to the UK.

Page 1

6 years ago

"Britain has a massive interest in a stable world economy and institutions like the IMF help to ensure that stability," he said.


"If you don't have a stable world economy you lose jobs in Britain and the British economy suffers."


He added that any loan made would bring in a return in the form of interest.


The chancellor can lend up to £10bn to the IMF without parliamentary approval.


He had some room for manoeuvre because parliament had previously approved £40bn of loans, of which only £30bn had been committed.


Shadow chancellor Ed Balls said: "The IMF cannot and should not become the de facto central bank of the euro area.


"The IMF is being put up to step in and play the role that the European Central Bank should be playing - a strategy which cannot work and is self-defeating by highlighting the lack of a proper ECB firewall."


He accused Mr Osborne of "running scared" of parliamentary scrutiny, adding: "There is a real risk that yet another sticking plaster response will mean the eurozone continues to duck the tough decisions they need to take."


The UK Treasury pointed out that no country had lost money lending to the IMF in its 67-year history.


t said its contribution to the IMF was not public spending. All UK loans to the IMF are financed from the UK's official reserves, remain UK assets and do not contribute to public sector net debt.


Committing the extra money does not mean it will actually need to be loaned.


IMF managing director Christine Lagarde said that some countries including Russia, India, China and Brazil had made private pledges but did not want to go public until they had discussed them back home.


The eurozone as a whole is contributing $200bn of the total and Japan, another major supplier of funds, is lending $60bn.


Australia will contribute $7bn, Singapore $4bn and the Republic of Korea $15bn.


Commitments so far

  • Euro area: $200bn
  • Japan: $60bn
  • South Korea $15bn
  • UK: $15bn
  • Sweden: $10bn
  • Norway: $9.3bn
  • Poland: $8bn
  • Australia: $7bn
  • Denmark: $7bn
  • Singapore: $4bn

Source: IMF. Some figures are approximate



The criticism from some on his own side won't surprise George Osborne. Nonetheless, Douglas Carswell's blunt description of Britain's latest contribution to the IMF as "bailout bull"' is hardly a show of confidence. And the criticism is echoed by others on the Conservative benches who believe the UK is committing funds to a failing project, which, of course, it is not part of.


Some also think it sends out an unpalatable message - that the UK is willing to take a multi-billion pound risk on the euro at a time of sustained austerity at home. But George Osborne believes the currency's survival is crucial if Britain's economy is to have any chance of strong growth again.


The chancellor has avoided the need for a fresh vote in Parliament to approve the loan - he already had consent for the £40bn total. But he is unlikely to offer any more. He knows that getting Parliament to approve that could be a struggle.


Page 2

Osborne defends 10bn IMF loan extension
6 years ago

Osborne defends £10bn IMF loan extension

The Chancellor, George Osborne, has defended the decision to lend the International Monetary Fund nearly £10bn of extra money. The IMF is trying to increase its ability to help other economies in difficulties. Mr Osborne has faced strong criticism from Labour and some of his own backbenchers.


But the Chancellor argued that a "broad body of Conservative opinion" understood the loan was necessary. Mr Osborne told Today presenter Sarah Montague that it was important to Britain's future to help at this time.


"First of all Britain has a massive interest in a stable world economy and institutions like the IMF help ensure that stability and if you don't have a stable world economy you lose jobs in Britain and the British economy suffers.


"And I'd say the second thing is this. Thanks to the tough action the government's taken, Britain can be part of the solution, not part of the problem."



IMF urges eurozone to make bold reforms
6 years ago

22 April 2012 Last updated at 10:37


IMF urges eurozone to make bold reforms

Sign for IMF World Bank Spring Meetings
The IMF says bold reforms are needed to boost confidence and growth
Related threads 

The International Monetary Fund (IMF) has told the eurozone it must make bold reforms to reassure financial markets.


statement from its governing council,says the 17-strong eurozone needs to make major structural reforms to boost confidence and growth.


On Friday, the annual meeting of the global body gained commitments from a range of countries to increase its lending firepower to $430bn (£247bn).


IMF head Christine Lagarde said the money was not just for the eurozone.


The IMF statement said: "In the euro area continued progress on ensuring debt sustainability, securing financial stability and undertaking bold structural reforms will be crucial to boosting confidence and productivity."


It said that the global economy was recovering gradually but that "risks were high" and interest rates needed to remain low.


The US did not provide any extra loans.


Its treasury secretary, Timothy Geithner, said Europe needed to use imagination and force to fight the continuing debt crisis.


"The success of the next phase of the crisis response will hinge on Europe's willingness and ability... to apply its tools and processes creatively, flexibly and aggressively to support countries as they implement reforms and stay ahead of the markets," he said.


German finance minister Wolfgang Schaeuble said the region was working hard to make changes.


"This includes labour markets, social security systems, public administrations and financial market institutions," he said.


The new money for the IMF's loan fund almost doubles the amount of money available to $1 trillion.


Some emerging economies expressed concerns that this should not just be used to help Europe.


The IMF's managing director, Christine Lagarde, welcomed the boost to funds but denied it was earmarked for the eurozone, where the crisis has led to bailouts for Greece, Ireland and Portugal. Some investors fear the crisis could eventually include the much bigger economies of Spain and Italy.


Mrs Lagarde said: "It is nice to have a big umbrella, or a big firewall... and that was really the achievement."


She said the talks had made clear that: "Number one, those bilateral loans... do not form a special pot of funds or coffers that have an EU label on it. It is for all members of the IMF."

6 years ago

Big problems in the UK over the £10 billion to bail out Countries in the Eurozone, talk about a U-turn Cameron is no Thatcher, the Brits are not pleased myself included.


Cameron in my opinion, must get his house in order, and keep to his word.


the sooner Cameron understands, Britiain would be better off, out of Europe and trading more with the US and our Commonwealth Countries the sooner Britain will pick up and clear its debts once and for all.


6 years ago

AMEN TO THAT, Ray!    You have delivered quite an education to all of us and now we understand fully what your country faces.    I have to agree with your comment that Cameron is no Thatcher.   It takes courage to do the right thing for one's country.   Both of our countries need to concentrate on trading more with each other.    

6 years ago

Ray, it seems that both Countries may have the wrong leader; what happened to Cameron as I thought he was all for pulling out of the Eurozone.

6 years ago

Linda, Cameron is without is a leader who does know his right hand from his left, the Brits have been and still are uptight over Cameron and the Euro-zone, it is no more than a complete U-Turn on what he said a few weeks ago.


and I would have to agree with you, we meaning the UK and the US must have the worse leaders in the world, however, I will say both Cameron and Obama are very well suited,


and I would add, if we put both of their brains together, we would not get one decent brain out of the pair of them, I wouldn't have any of them as ornament's in my display unit


you will understand more once I posted the next report in relation to £16 billion why the Brits get so uptight.

Government departments are asked to find 16bn more savings
6 years ago

23 April 2012 Last updated at 17:08


Government departments are asked to find £16bn more savings

Danny Alexander

Danny Alexander said departments would share spending information with the Treasury each month

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Government departments are being asked to identify about £16bn more savings which could be made if needed to pay for new policies or spending demands.


Chief Secretary to the Treasury, Danny Alexander, says they must identify 5% of their budgets as part of measures to tighten financial management.

Departments will also have to monitor and share spending information with the Treasury on a monthly basis.


He said the UK finances would never again be allowed to get into "a mess".


In an interview with the BBC's political editor Nick Robinson, Prime Minister David Cameron said these were "difficult economic times" and if he did not deliver a "nailed down" plan he would not be able to keep interest rates low.


Asked if it meant the public should be braced for more cuts to come, he said: "It always was a multi-year programme, it was never a one-off set of reductions that we had to make - we always set out that plan, the plan hasn't changed, we have to deliver that plan."


But he said he wanted a growing economy and different country that rewarded hard work, reformed welfare and education and was tackling the deficit.


The government is implementing spending cuts in a bid to repair public sector finances, which were hit by the economic downturn following the credit crunch.


Unforeseen costs


Mr Alexander outlined the changes in a speech to the Institute of Fiscal Studies think tank, in which he stressed the importance of "fiscal discipline".


He said the coalition had so far made good progress towards its spending targets for the review period.


As a result the UK had been sheltered from the "worst of the storm that continues to affect our eurozone neighbours".


However, reforms were needed to ensure the plans were not knocked off track by unforeseen costs, he added.


"In an environment of economic uncertainty, with ongoing instability in the eurozone, the UK's large deficit remains a crucial economic vulnerability," Mr Alexander said.


"It remains a clear and present danger to stability."


He said the new rules had been drawn up with finance directors from across Whitehall, "and are designed to fundamentally change and improve financial management across all organisations spending public money".


He said the changes were part of a bid to end a system of financial management in government that has been "stifled by poor information sharing and poor incentives".


"From now on, all departments must monitor and share spending information with the Treasury on a monthly basis. And that data must be consistent."


Whitehall departments are being told to identify 5% of their spending - which works out at £16.3bn of the total £327bn - to act as their department's contingency fund.


"In the spending review, we deliberately kept the reserve small in order to get the most money out to departments," Mr Alexander said.


"It means that departments have to be able to deal with problems that arise from within their own budgets.


"Many departments already operate a small 'unallocated provision' in their annual budgets, to meet smaller pressures that arise.


"And, under the new rules, I have asked all departments to identify around 5% of their resource budget that could be re-prioritised if new pressures emerge or new policies have to be funded, so there is a shared understanding of how it could be paid for."



Page 1 

6 years ago

'Millionaire's Budget'


He said the new controls were "not just a tweak to the Whitehall machine".


"They are another signal of our unwavering determination to deliver the fiscal consolidation we promised," the minister added.


Labour says the government's economic policies are failing the country amid high unemployment figures and sluggish growth and accused the government of delivering a "millionaire's Budget".


Party leader Ed Miliband has repeatedly attacked the government for cutting the top rate of tax from 50p to 45p, for people on more than £150,000 a year - saying the decision had "failed the fairness test".


Mr Cameron defended the decision to lower the top rate of income tax from next April - the government saying the aim was to get more out of the rich by cracking down on tax avoidance measures.


"We are not giving the rich a tax cut, we took the top rate of tax down to make us competitive with the rest of the world but taxes on the rich went up - we have paid for the cost of cutting that top rate of tax five times over from the richest people in the country."



Danny Alexander says the Treasury simply wants to introduce better financial management in an era of belt tightening.


A determination to stick to the government's strict spending plans means more must be done to monitor how scarce resources are used - and to make clear to profligate departments that the Treasury can't be relied on to bail them out if unforeseen events place new pressures on budgets.


But his initiative carries some political risks.


If departments are required to identify 5% of their budgets which could be regarded as 'low priority' spending then the opposition is likely to suggest the Treasury is really clearing the way for future cuts.


With the possibility of actual projects - and not just cash sums - being earmarked for the potential chop, this could be a political gift for Labour.


Even if overall departmental spending limits don't alter, the identification of possible cuts of 5% in the health budget, for example, could prove politically tricky if made public.


And within the corridors of Whitehall, the apparition of central Treasury control - which some mandarins felt had been exorcised when Gordon Brown departed No 11 - has reappeared. Autonomy is apparently too costly a commodity in an age of austerity.


Page 2

Eurozone deficits fall as austerity bites
6 years ago

Eurozone deficits fall as austerity bites

Germany saw both its deficit and overall debt levels fall last year

Eurozone governments managed to cut sharply their budget deficits last year, but overall debt levels continued to rise, official figures have shown.


The deficit to GDP ratio for the bloc as a wholefell to 4.1% from 6.2% in 2010, Eurostat said. The overall debt to GDP ratio rose to 87.2% from 85.3%.


The Republic of Ireland, Greece and Spain had the highest deficits.


Eurozone governments have introduced far-reaching austerity measures designed to cut deficits.


The deficit ratio is the difference between a government's annual expenditure and its revenues, expressed as a percentage of its annual GDP. The official deficit target, as laid down in the Maastricht Treaty, is 3% of GDP.


Following the financial crisis of 2008, a year in which the eurozone's deficit ratio stood at 2.1%, budget deficits increased significantly as governments spent billions of euros on bail-out packages and stimulus measures.


More recently, governments have cut spending in order to reassure international lenders of their credit worthiness and bring deficits back towards target.


The Irish Republic reduced its deficit from 31.2% in 2010 to 13.1% last year; Greece from 10.3% to 9.1% and Spain from 9.3% to 8.5%.


However, the Irish government says its deficit last year was 9.4%, beating the target of 10.6% set as a condition of its international bailout, when the money it injected into its banks is taken out.


Germany cuts its budget deficit from 4.3% to 1% of GDP.


Outside the eurozone, the UK saw its deficit fall from 10.2% to 8.3%.


However, overall debt levels across the eurozone continued to rise last year.


The debt ratio is a country's total stock of debt expressed as a percentage of its total annual economic output.


The debt to GDP ratio in the Irish Republic rose from 92.5% to 108.2%, in Greece from 145% to 165%, and in Portugal from 93.3% to 107.8%.


The UK's debt ratio rose from 79.6% to 85.7%.


By contrast, Germany managed to cut its debt ratio from 83% to 81.2%.

6 years ago

Ray, you knew I was going to ask this question.   "Where do you think this will go?"   Is it really possible to put the euro to rest?   And if so, how will this impact these european countries in the long term?   Tourism is a serious factor in bringing revenue to many of these countries.   Greece comes to mind.  

Darling: Eurozone plan 'will not work'
6 years ago

Diane, I have some very important information that I will be threading very shortly in relation to the EU and Britain and it is a big worry not only for the UK but also America in so much of our troops fighting side-by-side in combat.


I was given the web-site address this morning by a very good friend in Surrey, I hope that you along with all other American's find the information interesting, I would assure yourselves, I did so much, I missed all my afternoon world snooker on TV, however, no doubt I will see the highlights later tonight, I hope.


I will leave you on this thread a Radio interview in relation to the Eurozone, please click on to the link that I will provide.


Darling: Eurozone plan 'will not work'

Former Chancellor Alistair Darling has said that the time has come to recognise that "the economic policies that the eurozone are perusing will not work".

Speaking to the Today programme's Evan Davis, he said that the Eurozone has signed up to a "daft treaty" that requires them to impose austerity "which is killing off growth".

"Without growth you never will get your borrowing down," he said.

Dutch crisis: PM Rutte appeals for responsible action
6 years ago

Dutch crisis: PM Rutte appeals for responsible action

Dutch PM Mark Rutte (24 March 2012)

Mr Rutte warned MPs that "standing still" was not an option for the Netherlands

A day after the fall of his government, Dutch PM Mark Rutte has urged MPs to react "responsibly" to the serious economic problems facing the country.


His minority government collapsed over last-minute disagreements about finding billions of euros in austerity cuts.


"The economy is flagging, employment is under pressure and national debt grows faster than we can afford," he said.


He said he expected a general election to take place on 12 September, rather than before the summer recess.


"That does most justice to the differing views in the chamber," he said. A number of political parties have called for a snap election at the end of June but Mr Rutte said there was no majority for an earlier poll and the cabinet would make a final decision on Friday.


Despite fears of an impact on investors, the Netherlands raised 2bn euros at a bond auction on Tuesday.


The Dutch government had been looking to raise between 1.5 and 2.5bn euros (£2bn; $3.2bn).


It sold 1bn euros of a two-year bond with a 0.523% yield and, significantly, sold 995m euros of a 25-year bond at a yield of 2.782%, which is barely higher than Monday's rate.


One bond trader told ANP news agency the sale was "a good result in these circumstances".


When news of the government's imminent collapse emerged over the weekend, economists predicted that the cost of Dutch borrowing would rise and the country would lose its triple-A status, following in the footsteps of France and Austria.


One agency, Moody's, said on Monday night that the fall of the government was "a credit-negative" but added that the Netherlands had a stable outlook and was in "a position of relative strength".


Page 1

6 years ago

'Henk and Ingrid'


The Netherlands has until 30 April to present the European Commission with a 2013 preliminary budget that will cut the country's projected budget deficit of 4.6% of GDP to within the EU's 3% limit.


Mr Rutte, in effect a caretaker prime minister since his resignation, told parliament that "standing still" was not an option for the Netherlands. He said he hoped that the political parties were ready "together with the cabinet to do what is necessary" to tackle the crisis.


He will now seek an agreement on holding the general election in September and on budget cuts of 16bn euros.


Since it came to office in October 2010, the minority government of Mr Rutte's liberal VVD party and the Christian Democrat CDA had been reliant on the support of Geert Wilders' Freedom Party (PVV).


When Mr Wilders walked out of vital budget talks on Saturday arguing that the proposals would harm pensioners and affect growth, the two coalition parties could no longer stay in power.


Mr Wilders told MPs on Tuesday that he regretted the collapse of budget talks, but said he could not sign up to a package that hit the typical Dutch household most of all.


"Either we opt for Henk and Ingrid, or we opt for the unelected eurocrats from the superstate that's called Brussels," he said.


He also objected to the idea of making "14 billion in cuts in one year while at the same time transferring billions to Europe".


Political commentators said that it would be impossible to reach a deal on austerity measures that would satisfy both the markets and Brussels unless all the centrist parties worked together.


One of the biggest dilemmas is for Labour party (PvDA) leader Diederik Samsom, commentators say, because he will have to decide between a compromise on cuts with Mark Rutte or confrontation, with a view to the forthcoming general election.






Richard Anderson

Business reporter, BBC News


The Netherlands is one of the few economies left in the eurozone with a AAA rating from all three major rating agencies.


However, Fitch warned last week that if debt levels continued to rise, this top rating could come under threat.


Looking at some other key indicators, the Dutch economy appears to be in good shape.


Unemployment and inflation, for example, are relatively low. However, as a big exporter, the Netherlands has been hit hard by the global downturn, which has affected demand for Dutch products, both in the eurozone and outside.


In fact, it exports a great deal overseas, and so has suffered from the relatively high level of the euro, says Jennifer McKeown, senior European economist at Capital Economics.


The Dutch housing market has also been very weak, hitting consumer confidence and spending. These are the reasons why the economy is back in recession after contracting in the third and final quarters of last year.


Page 2

6 years ago

We are talking about the european socialist countries....high entitlement payout, no significant tax base coming in to cover the cost and now as socialists tend to do they look to someone else to pay the bill.   The euro was wrong because of what we are witnessing abuse of the system looking to "others" to pay for their socialist failures.   Socialism doesn't work.   Spreading the wealth doesn't work.   It always fails.

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