UK Deputy PM: Euro-Zone Inaction Will Fuel Extremism – Report

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The FINANCIAL — If the euro zone fails to come up with a plan to tackle its crisis soon nationalistic, extremist, xenophobic and populist movements will increase across Europe, U.K. Deputy Prime Minister Nick Clegg said in comments published Monday.

 

"The combination of economic insecurity and political paralysis…is the ideal recipe for an increase in extremism and xenophobia," he said in an interview to Germany's Der Spiegel magazine.

After months of guarded comments about the crisis in their main trading partner, U.K. government officials have become increasingly outspoken in recent days about what they think euro-zone countries must do.

Last week Prime Minister David Cameron said the euro zone either has to make up or it's looking at a potential break-up. He urged the core countries in the currency union and the European Central Bank to do more to tackle the crisis.

Newspapers reported Monday that Cameron said during a trip to the U.S. that Greece's general election next month is tantamount to a referendum on their country's membership of the euro zone.

According to Dow Jones, in an editorial in the Sunday Times Chancellor of the Exchequer George Osborne said open speculation about the outlook of the euro zone by many officials from within the currency area meant the genie was now out of the bottle.

"We are clear: euro-zone countries must either stand behind their currency or face up to the prospect of Greek exit, with all the risks that could involve," he said.

The U.K. has long urged the euro zone to build a strong firewall to contain any contagion from the crisis, ensure its banks are well capitalized and regulated, tackle the debt problems of Greece, and fix the underlying structural problems in the many countries in the currency area.

The need for the euro zone to tackle its crisis has taken added urgency in the U.K. after official data showed the country fell back into recession in the first quarter of the year.

Ahead of a visit to Berlin this week with Business Secretary Vince Cable, Clegg said it wasn't sustainable to believe the euro zone could thrive through fiscal discipline alone. It had to either share debt or deal with the shocks in one part of the system through fiscal transfers, he said.

"We are still seeing a lack of clear, comprehensive leadership which sets out a vision for how the euro zone is going to be sustainable in the long run," he said. "We urgently need a comprehensive solution which talks about the different bits of the whole canvas; structural reform, the single market reforms."

 

 

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