U.K. Chancellor of the Exchequer George Osborne said economies across Europe are being damaged by uncertainty over the future of the euro region rather than deficit cutting.
“The euro-zone crisis is having a real impact on growth across the European continent, including Britain,” Osborne said as he arrived in Brussels for talks with European Union finance ministers, according to remarks released by his office. “The British recovery has been damaged over the last two years not by Britain getting a grip on its public finances, but by uncertainty in the euro zone. It is that uncertainty, not austerity, that is doing the real damage to the European recovery, and indeed the British recovery.”
The possibility of Greece leaving the euro and readopting the drachma as its currency moved to the center of the political debate as European finance ministers gathered in Brussels for talks. The crisis is rattling markets as authorities in Athens struggle to form a government and leaders in Madrid battle to convince investors they can clean up banks’ balance sheets and curtail spending by regional governments.
In Britain, Osborne and Prime Minister David Cameron are under growing pressure after the economy slipped back into recession and an anti-austerity backlash gains ground in Europe, where voters punished administrations in elections in France and Greece.
Cameron’s coalition of Conservatives and Liberal Democrats says there can be no compromise on its plans to eliminate the bulk of a deficit of 8 percent of gross domestic product by 2017.