In his latest speech delivered in Washington DC, Chancellor Osborne warned leaders in the eurozone that they had six weeks to resolve their differences and to carry out the agreed support for troubled members. In particular the world is looking at what they will do for Greece which has been hardest hit by economic hardships.
According to Osborne, the problems in Europe take on a heightened sense of urgency because of the current turmoil in global financial markets. This is stated against the backdrop of mounting pressure from the G20, leading developed and developing countries, urging Europe to act now.
G20 is set to meet in six weeks in Cannes, and that is the deadline set to resolve these conflicts. Osborne states that those members withholding support need to act before the summit and that this is all the more urgent because of the shaky mood within financial markets around the world.
The chancellor refers to what is going on now in the eurozone as “bad economics” and “bad politics.” He reinforced the fact that economic support was pledged in July and now those member states that pledged aid are withholding it due to what is being ascribed to political disputes. This support could sustain troubled eurozone members through this downturn in the economy and it could ensure eurozone banks had sufficient capital to hold out against market pressures.
As well, the Chancellor said that even though there would be a certain amount of impact on the UK from what is unfolding in Europe, he had every intention of continuing forward with is austerity programme. Even though the economic outlook is bleak, he intends to press forward with strict economic cuts. Osborne stated that the BoE had the responsibility of support demands in the months to come.
This appears to be setting the stage for another round of quantitative easing in the UK. However, he stands by his assertion that political bickering must soon end in the eurozone before the contagions spreads farther afield.