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May 21, 2010    

Cameron: “We were right not to join the euro”

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by Kay Murchie
Cameron: “We were right not to join the euro”

David Cameron, Britain’s new Prime Minister, has defended the former Government’s decision to keep Britain out of the euro.

On his first overseas trip since becoming PM, Mr Cameron met French President, Nicolas Sarkozy, at the Elysee Palace in Paris yesterday.

Today, he will travel to Germany to meet with Chancellor Angela Merkel.

Mr Cameron said: “We were right not to join the euro and… right to stay out of the euro.”

He added: “But let me be absolutely clear, it’s in Britain’s interests that the euro zone is a success, that the euro is a successful currency, that the euro zone economies recover.”

The new Con-Lib coalition Government has said the UK will not join, or prepare to join, the euro during this parliament.

However, he has said his Government would honour Britain’s agreement to back euro zone finances - an agreement reached prior to the general election earlier this month.

He did point out though that as a non-member of the euro zone, the UK should not provide any financial aid.

His comments come as EU leaders prepare for a meeting in Brussels later today to discuss economic reforms.

Fears are mounting that the euro zone’s handling of its sovereign debt crisis could put the global economic recovery at risk.

There are also fears of the lack of agreement between EU leaders after Germany’s sole decision to ban risky bets on bonds, stocks and credit protection, until March next year.

The ban, imposed by the German Government, will apply to the country’s 10 most important financial institutions, and is designed to stop the short-selling of euro Government bonds.

Global stock markets and the euro has been hit of late as fears that the euro zone debt crisis could spread to other countries.

In February of this year, leading think tank, the Centre for Economic and Business Research (CEBR), claimed that the recession and unemployment would have been much worse if Britain had joined the euro.

According to the think tank, if Britain had dropped the pound, the unemployment rate would be at 15% (double what it is now) and GDP might have slumped by 7% last year, instead of 5%.

However, while it said growth would have been slightly better between 1998 and 2006, the slump would have been much greater.

The think tank also believes that the euro zone could break up before 2015 as a result of the severe debt crises in some euro zone economies.

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Tags: , Brussels, , Centre for Economic and Business Research, , , EU leaders, , , European visit, join, , Nicolas Sarkozy


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