Eurozone crisis has a long way to go, warns Cameron

Risk of confrontation with Continent's leaders as PM spreads blame for double-dip recession

David Cameron issued a stark warning yesterday that the eurozone is facing a renewed threat of collapse as he blamed economic woes on the Continent for Britain's double-dip recession.

In comments which will infuriate other European leaders ahead of elections in France and Greece next weekend, the Prime Minister said Europe was not "anywhere near half-way through" its currency crisis.

And he predicted that the euro could yet fall apart as countries such as Spain, Greece and Italy struggle to cope with the economic constraints imposed upon them.

Yesterday, thousands of people took to the streets across Spain to protest against government cuts aimed at tackling a debt crisis that has pushed the country back into recession and sent unemployment close to 25 per cent.

Next weekend, voters will go to the polls in both France and Greece in elections which are likely to boost opposition to German-backed austerity measures.

Hedge funds are already anticipating François Hollande's likely victory next Sunday will lead to a sharp deterioration in markets' opinion of France's creditworthiness and are betting against the bonds of "core" eurozone countries.

In Greece, voters look likely to punish both the country's two main political parties, with some polls predicting that smaller groups opposed to the EU-IMF economic-recovery plan could gain as much as 50 per cent of the vote.

Against this background, sources in the European Commission described Mr Cameron's remarks as "unhelpful". "We do not agree with him," they added.

An adviser to the French presidential front-runner said: "With the British economy shrinking in the last quarter, Cameron should perhaps give his attention to problems nearer to home. All European leaders, inside and outside the euro area, should be careful not to encourage market volatility by speculating about future difficulties. We have problems enough." A German government source added: "I would say we are more optimistic than he is."

In an interview with the BBC, Mr Cameron said struggling economies across the Channel, which receive 40 per cent of all UK exports, were harming Britain's prosperity. "I don't think we are anywhere near halfway through it [the crisis] because what's happening in the eurozone is a massive tension between the single currency that countries are finding very difficult to adapt to.

"It's going to be a very long and painful process as they work out: do they want a single currency with a single economic policy, or are they going to have something quite different?"

Asked why the US was growing after implementing a less strict austerity policy than the UK, Mr Cameron said: "They don't have the eurozone on their doorstep, and we've seen in the last couple of weeks Spain going into recession, Holland going into recession, Italy going into recession."

His remarks drew condemnation from both Labour and some senior Liberal Democrats. Lord Oakeshott of Seagrove Bay, the former Liberal Democrat Treasury spokesman in the House of Lords, suggested Mr Cameron was deliberately playing up the European crisis to distract voters from domestic problems.

"It's unstatesmanlike and so short-sighted for a British Prime Minister to rock the European boat to distract attention from his own troubles," he said. "Our EU membership is essential for British jobs and prosperity."

Ed Balls, the shadow Chancellor, said attempts to blame the eurozone for pushing Britain back into recession "just won't wash". "Britain's recovery was choked off 18 months ago – well before the recent eurozone crisis," he said.

But Mr Balls conceded that the difficulties facing the eurozone were significant. "What is now happening in the eurozone is deeply concerning. It still has no plan for the jobs and growth. And eurozone leaders have still not taken the action necessary to prevent contagion spreading."

Privately, Downing Street is concerned about Mr Hollande's campaign pledge to demand a new EU growth pact in return for France signing the German-initiated fiscal treaty.

Sources insisted his public comments were not an attempt to deflect attention from the government problems ahead of this week's local elections but an attempt to raise awareness of a problem that has not gone away even if it is not in the headlines.

"Frankly, the fundamental problems faced by the eurozone are as bad, if not worse, than they were," they said. "What the Prime Minister was trying to get across was that this has a significant impact on the British economy too."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?