Osborne warns of eurozone crisis

George OsborneThe prospect of Greece crashing out of the euro is damaging economies across Europe, including Britain's, Chancellor George Osborne has warned.

Uncertainty over the future of struggling eurozone nations was having a "real impact" on growth, he said.
Speaking in Brussels, where he is attending talks between European Union finance ministers over the continuing crisis, Mr Osborne criticised the "open speculation" by some eurozone members.

"The eurozone crisis is very serious and it's having a real impact on economic growth across the European continent, including in Britain, and it's the uncertainty that's causing the damage," he said.
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"Of course countries have got to make difficult decisions about their public finances. We know that in Britain. But it's the open speculation from some members of the eurozone about the future of some countries in the eurozone which I think is doing real damage across the whole European economy."

Wrangling between the political parties in Athens has raised the real prospect of Greece leaving the eurozone - possibly with further bailouts for Athens involving all 27 member states.

The parties are trying to stitch together an emergency administration to run the country after an election delivered no overall majority. There will be a final push for a deal on Tuesday but, if no deal can be reached, elections must be called for next month. The prospect of another election increases the likelihood of the Greek public rejecting the austerity package which has severely hit jobs and incomes.

But the European Commission has warned that any Greek administration would have to honour the austerity policy agreed as part of multibillion-pound EU-IMF bailout packages to keep Greece afloat.

The growing uncertainty hit markets, with nervous traders wiping £28.5 billion from the value of London's leading shares index. But the European Commission insisted the austerity plan remained the best option.

A spokesman said: "This is the best thing for Greece, for the Greek people and for Europe as a whole. Nothing has changed in our position - we want Greece to stay in the euro, we think the Greek (austerity) programme is the best course for Greece and, while we respect the on-going efforts in Greece (to form a government), we say that Greece must honour its (austerity) commitments."

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