Eurozone ‘faces sovereignty loss’

Eurozone countries will have to swallow “a big loss of national sovereignty” by pooling resources and control over fiscal policy to restore long-term stability to the single currency, Chancellor George Osborne has said.

Mr Osborne said that the global economy was at its “most dangerous moment” since the crash of 2008, with real risks to British jobs and growth.

But he insisted once again that the UK will not be part of any EU fiscal integration and will not bear the financial cost of bailing out the single currency.

Writing in the Evening Standard, Mr Osborne said: “The financial risks of standing behind the currency will ultimately be borne by eurozone citizens. The eurozone has the financial capacity to restore stability. They now need to deploy it without delay.”

Mr Osborne also restated his opposition to a Europe-only Financial Transaction Tax, warning that a levy on trading in shares and derivatives which does not include the US or China would be “economic suicide” for Britain and Europe.

The European Commission launched proposals for an FTT in September, and they have the backing of France and Germany, who think the levy could help finance the eurozone bailout. Meanwhile, campaigners want some of the revenues from a “Robin Hood Tax” to go towards aid for the poor world.

But the Chancellor said: “Proposals for a Europe-only Financial Transactions Tax are a bullet aimed at the heart of London… The EU should be coming forward with new ideas to promote growth, not undermine it.”

Despite “grounds for optimism” following the formation of new governments in Greece and Italy, Mr Osborne warned that “this remains the most dangerous moment for the world economy since Lehman Brothers went down in the autumn of 2008”.

And he added: “The epicentre may be across the Channel in the eurozone, but the risks to Britain are no less real.

“Jobs and growth in our country have already been damaged by this euro crisis. In such uncertain times, this coalition Government’s priority is to help Britain ride out this storm instead of being consumed by it.”

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