Leading article: Britain cannot stand apart from the euro crisis

Mr Cameron must throw his weight unequivocally behind efforts to save the single currency

Share
Related Topics

Exceptionally threatening. Such is the Governor of the Bank of England's assessment of the euro crisis. Indeed, the situation is so perilous that Sir Mervyn King is urging Britain's banks to boost their financial buffers post-haste, and his staff have contingency plans in case the single currency breaks up altogether.

Nor is Sir Mervyn the only central banker to be conducting hasty defensive manoeuvres. The Federal Reserve decision to slash dollar lending rates speaks volumes about Amrican concerns that the euro panic is turning into a second credit crunch.

Unfortunately, as Sir Mervyn points out, central banks cannot solve the eurozone's problems. Only Europe's politicians can do that. But there is a faint glimmer of hope. Finally, after months of cavilling and denial, European leaders are at least trying to forge the necessary political solution.

The euro crisis has passed so many turning points with so little progress being made that the prospect of yet another "critical" summit is hard to credit. But next week's meeting of European leaders is indeed critical. Angela Merkel and Nicolas Sarkozy are to set out their vision of a "stability union", which will, in effect, establish the fiscal equivalent of the single currency by allowing, for example, central oversight of members' budgets and automatic sanctions if rules on debt are broken.

Berlin, at least, hopes that a broad agreement will be enough to calm the markets and buy time for a formal deal at the EU Council meeting in March, to be ratified the following December. It is a timetable that can only exist in the realm of fantasy, given the constitutional implications of eurozone members surrendering elements of budgetary control. But that is hardly the point.

Germany has refused to countenance either plausible solution to the markets' acute loss of trust in eurozone sovereign debt: namely, either eurobonds, or the European Central Bank (ECB) acting as a "lender of last resort". Fiscal union, while the only long-term answer, cannot allay the immediate panic. But it is only once a framework for closer union is in place, with clear mechanisms to force members to maintain their austerity programmes and thereby limit the risk of German liabilities, that discussions can begin.

It is difficult to gauge the long-term implications for Britain of such seismic shifts in Europe. But in the short term, there is an opportunity to play a constructive role, for once. When David Cameron meets Mr Sarkozy today, the stability union will be high on the agenda. He must rise to the occasion. So far, the Government has pursued a typically contrary course, calling vociferously for swift action, while refusing direct involvement and, at home, talking up the prospect of repatriating powers to Britain. It is time for the Prime Minister to change course.

Ultimately, eurozone countries will have to pay to save the euro: the over-indebted with grinding austerity, the Germans by acting as de facto guarantor for others' debts. Berlin's seemingly reckless delays are an understandable attempt to ensure the risk to Germany is minimised. Whether there is time for such manoeuvrings is a different – and highly alarming – question. But the only sensible course for Britain is to offer absolute support.

In the end, the UK faces a tough choice on Europe, one of far greater subtlety and implication than Eurosceptic arguments in general allow. But such concerns are for another day. Now, Mr Cameron must stop carping from the sidelines. He must stop all talk about the repatriation of powers. He must throw his weight unequivocally behind efforts to save the euro. As Sir Mervyn has made abundantly clear, the crisis is of historic proportions. In the face of it, the Prime Minister must act the statesman.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

English Teacher

£100 - £125 per day: Randstad Education Chelmsford: English Teacher - Saffron ...

Primary Supply Teacher - Northants

£90 - £130 per day: Randstad Education Leicester: Primary School Supply Teache...

Maths Teacher

£21000 - £35000 per day: Randstad Education Chelmsford: Maths Teacher - Saffro...

Chemistry Teacher - Top School in Malaysia - January Start

£18000 - £20400 per annum + Accommodation, Flights, Medical Cover: Randstad Ed...

Day In a Page

Read Next
 

Being catcalled, groped and masturbated at is a common part of the female experience

Bryony Beynon
A general view at the 'Blood Swept Lands and Seas of Red' evolving art installation at the Tower of London  

London's sea of poppies is a beautiful monument to the fallen of World War I

Ken Eggleston
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes
Independent writers remember their Saturday jobs:

Independent writers remember their Saturday jobs

"I have never regarded anything I have done in "the media" as a proper job"
Lyricist Richard Thomas shares his 11-step recipe for creating a hit West End musical

11-step recipe for creating a West End hit

Richard Thomas, the lyricist behind the Jerry Springer and Anna Nicole Smith operas, explains how Bob Dylan, 'Breaking Bad' and even Noam Chomsky inspired his songbook for the new musical 'Made in Dagenham'
Tonke Dragt's The Letter for the King has finally been translated into English ... 50 years on

Buried treasure: The Letter for the King

The coming-of-age tale about a boy and his mission to save a mythical kingdom has sold a million copies since it was written by an eccentric Dutchwoman in 1962. Yet until last year, no one had read it in English
Can instilling a sense of entrepreneurship in pupils have a positive effect on their learning?

The school that means business

Richard Garner heads to Lancashire, where developing the 'dragons' of the future is also helping one community academy to achieve its educational goals
10 best tablets

The world in your pocket: 10 best tablets

They’re thin, they’re light, you can use them for work on the move or keeping entertained
Lutz Pfannenstiel: The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents

Lutz Pfannenstiel interview

The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents
Pete Jenson: Popular Jürgen Klopp can reignite Borussia Dortmund’s season with visit to Bayern Munich

Pete Jenson's a Different League

Popular Klopp can reignite Dortmund’s season with visit to Bayern
John Cantlie video proves that Isis expects victory in Kobani

Cantlie video proves that Isis expects victory in Kobani

The use of the British hostage demonstrates once again the militants' skill and originality in conducting a propaganda war, says Patrick Cockburn
The killer instinct: The man who helps students spot potential murderers

The killer instinct

Phil Chalmers travels the US warning students how to spot possible future murderers, but can his contentious methods really stop the bloodshed?
Clothing the gap: A new exhibition celebrates women who stood apart from the fashion herd

Clothing the gap

A new exhibition celebrates women who stood apart from the fashion herd
Fall of the Berlin Wall: Goodbye to all that - the lost world beyond the Iron Curtain

The Fall of the Berlin Wall

Goodbye to all that - the lost world beyond the Iron Curtain