Saturday November 12,2011
By Martyn Brown
DAVID Cameron issued a stark warning over the future of the eurozone yesterday amid fears that France could be the next economy to fall prey to the markets.
The Prime Minister said there was “a big question mark” over the future of the euro and warned that the crisis could spell difficult times ahead for the British economy.
His comments came as international pressure grew for action by the euro- zone to resolve the debt turmoil.
Besides France, Spain too is in new difficulties. Its economy has ground to halt, figures showed, fuelling fears that it is about to plunge into recession.
As Italy began passing stark austerity measures and Greece swore in a new cabinet, the US led demands for swift action on implementing emer- gency eurozone rescue plans agreed in October.
President Barack Obama spoke by phone to German chancellor Angela Merkel, French president Nicolas Sarkozy and Italian president Giorgio Napolitano.
Former Prime Minister Gordon Brown waded in with a doom-laden warning that France, the eurozone’s second biggest economy, risks becom- ing the next victim of the sovereign- debt crisis.
Speaking in Mos- cow he said: “France is in danger of being picked off by the markets in the coming weeks and months.”
The difference between French borrowing costs and the much lower costs Germany pays have hit record levels.
On Monday France announced a 65billion euro (£55billion) austerity package over five years – its second in three months – in a bid to retain its tri- ple-A credit rating which allows it to borrow at low rates.
But EU economic and monetary pol- icy commissioner Olli Rehn urged further steps to ensure France is able to cut its public deficit to an EU limit of three per cent of gross domestic product in 2013 from an estimated 5.7 per cent this year.
Mr Cameron said he was doing what- ever he could to get Britain “safely France’s President Sarkozy yesterday
through the storm”.
He told BBC Radio 2’s Jeremy Vine: “These are very worry- ing times, I can’t hide that from you. It is a very difficult time for the eurozone.
“There is real turbulence in the markets, real question marks over whether countries can deal with their debts and a big question mark over the future of the eurozone.
“Our responsibility, my responsibility, is of course to try to help bring about a solution to these problems, but above all my priority is to try to keep the British economy safe.”
In Spain, the eurozone’s fourth largest economy, austerity measures brought in to help bring its deficit within EU limits saw its National Sta- tistics Institute report yesterday that GDP did not grow at all in the last quarter. Spanish tax revenues are also down and it is blighted by chronic unemployment. But global stock markets were given some respite after Italy’s adoption of austerity measures. Shares in the US and Europe rose, while the cost of borrowing for Italy retreated from the record high it reached earlier in the week.
Italian Prime Minister Silvio Berlus- coni is now set to be replaced by Mario Monti, possibly this weekend.