Common control of banks is urged

Mon, Jun 11, 2012, 01:00

BRITISH REACTION:BRITISH FOREIGN Secretary, William Hague has welcomed moves to recapitalise Spanish banks, but London has warned that the euro zone cannot continue just to “treat the symptoms” of the crisis.

“We welcome what we’ve heard about the euro zone loans to the Spanish banking system,” said Mr Hague, although London would wait to see “the further details to be decided”.

“We have been asking for the euro zone to take decisive measures to stabilise itself in terms of the European Central Bank and supporting the banking system,” he continued.

Earlier, however, the British chancellor of the exchequer, George Osborne, said: “The lesson of the last two years is that treating the latest symptom does not cure the underlying conditions.”

The euro zone solution “doesn’t have to be a full-blown United States”, but it must bring common control of euro zone banks, he added. Greater integration among euro zone countries would lead to mounting pressure for a referendum in the UK on its EU membership.

So far, the Conservatives/Liberal Democrats coalition has pledged that a referendum would be held if more powers had to be conceded by London to Brussels.

Faced with an economic slump in the UK, Mr Osborne and prime minister David Cameron have been determined to lay the blame on the euro crisis.

However, Mr Osborne’s explanation for the UK’s economic woes is not accepted even by some Conservative backbenchers.

“The idea that it is all the fault of the euro zone is demonstrably wrong,” said noted Eurosceptic MP Douglas Carswell, adding that Mr Osborne should be encouraging some euro zone countries to quit the single currency.

“If the chancellor does believe the euro to be a burning building with no exits, why not help the neighbours escape?” Mr Carswell asked. “The sooner that our trading partners leave the euro, the sooner they can return to prosperity.”

Meanwhile, former Labour foreign secretary David Miliband warned that the EU was “testing to destruction” the belief that it would always “do the right thing after the wrong thing”.