Europe: Cameron to urge 'tough' decisions

2012-06-18 08:37

Los Cabos - British Prime Minister David Cameron is expected on Monday to urge Europe to make tough decisions including structural reform, warning of the risk of "perpetual stagnation" without action.

Cameron was en route to a summit of the Group of 20 major economies in the Mexican resort of Los Cabos, hours after concerns of a greater eurozone crisis eased as Greek voters handed a victory to supporters of a bailout.

In excerpts released of his speech, Cameron said that the eurozone - of which Britain is not a member - should be prepared to make "sacrifices" so that the continent's woes do not sap the rest of the global economy.

"If the eurozone is to stay together then it has to make at least some of these difficult decisions," Cameron said in the prepared remarks.

The alternatives "are either a perpetual stagnation from a eurozone crisis that is never resolved or a break-up caused by a failure to address underlying economic fundamentals that would have financial consequences that would badly damage the world economy, including Britain".

Cameron will encourage structural reforms of banks. In Britain, he is pushing ahead with a costly shake-up of the financial sector in an effort to avoid a repeat of the 2008 financial crisis.

The British prime minister will also call for a more activist role by the European Central Bank, amid efforts by the Bank of England to pump cash into the system in a quantitative easing policy.

Cameron is a champion of austerity measures and has stood by his plan even though the British economy slipped back into recession at the end of last year.