On Saturday, Eurozone ministers agreed to lend Spain’s banks up to 100bn Euros to save them from failure, following the collapse of their property market which left them with far too many bad loans.
Thankfully, the markets have reacted positively for now, which is undoubtedly good news. However the bailout is a stark reminder that the on-going woes of Eurozone countries are far from over.
Eurozone needs an immediate plan to tackle the crisis and to restore market
confidence, as well as a longer-term strategy to ensure a strong single
currency. Our own economy is benefiting from safe-haven status because of the
Government’s plan to deal with Britain’s debts. The deficit has already been
reduced by more than a quarter in just two years, but there is still a long way
to go. Our recovery, already facing powerful headwinds from high oil prices and
the debt burden left behind by the boom years, is in danger of being swamped by
the Eurozone crisis on our doorstep.
Much of the Eurozone crisis was caused by ill-disciplined Governments who took on excessive borrowing, such as Greece, Portugal and Italy. Greece may need to leave the Euro. The IMF says that setbacks in the Eurozone are the “key risk to economic prospects and financial stability in the UK”.
I believe we need to keep control of our nation and put Britain's interests first in all of our international relationships. It is imperative that Britain does concede any further control to the EU. A banking union is a natural extension of a single currency, but we are clear that Britain will not take part and it is entirely reasonable for us to seek safeguards to protect British taxpayers and preserve the single market.
The Coalition Government must continue to show that Britain is in Europe but not run by Europe.