U.K. Prime Minister David Cameron urged the European Central Bank and the euro area’s strongest economies to do more to stamp out the region’s financial and economic crisis.
Speaking at an event today in Los Cabos, Mexico before a meeting of Group of 20 leaders, Cameron said nations need to sustain their push for banking and fiscal reform because they can’t spend their way out of the economic crisis. He urged policy makers to address instability in the euro area and government indebtedness by combining short-term monetary “activism” with long-term reforms aimed at boosting competitiveness, all the while avoiding protectionist trade barriers that slow global growth.
It “won’t be easy” for Greece to take the steps required to stay in the 17-nation euro zone even after the nation yesterday elected a party that promises to keep bailout aid flowing, Cameron said.
“The euro zone has two choices,” Cameron said. “Either they try to force down wages and prices in the periphery as fast as they can to restore competitiveness, with all the political and economic tensions that will entail, or the core of the euro zone has to do more to support the periphery through greater fiscal burden sharing.”
Amid the U.K.’s first double-dip recession since the 1970s, Cameron’s government is pushing ahead with the largest budget cuts since World War II, pointing to Greece as a reason.
Cameron and Chancellor of the Exchequer George Osborne have staked their reputations on creating jobs and investment in the private sector to replace public spending. The Labour opposition says the policy has failed and has urged the government to switch course.
Budget cuts, a squeeze on households as inflation outpaces wages and turmoil in the euro region -- the biggest market for British goods -- are weighing on a U.K. economy that has recovered barely half of the output lost in the recession of 2008 and 2009.