Chancellor warns UK at risk if euro collapses
As the leaders of the European Union’s 27 member states prepare to meet over a possible new EU treaty, the UK’s chancellor George Osborne warned a House of Lords committee that a collapse of the euro would do ‘enormous damage’ to the UK economy.
Mr Osborne also stressed that the damage would be long-term.
Speaking to the House of Lords Economic Affairs Committee he said: “Those who say we would have a year or two of hardship then bounce back out of it, are maybe somewhat optimistic.
“There would be a significant drop in UK GDP if the euro were to fall apart.”
Mr Osborn said that the government is making contingency plans in case the worst happens and the euro collapses, but warned that this would only have limited effect.
The Prime Minister today said he would not hesitate to veto an EU deal at the Brussels summit if it was not in the best interest of the UK.
EU leaders will discuss France and Germany’s plans for a new treaty which would strengthen the fiscal rules for the 17 member states using the euro, including budgetary oversight and common corporation and financial transaction taxes.
Although the UK does not use the euro, the EU treaty cannot be changed without the support of all EU member states, including the UK.
In exchange for the UK’s support, Mr Cameron has pledged to secure safeguards on financial regulation and for the single market.
“So in return for the treaty that they want - to sort out the problems of the eurozone - I want to make sure we get a good deal for Britain, we keep our markets open and we have the power here in the UK to make sure that our top industries are properly promoted and enhanced,” he said.
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