Britain must help rescue eurozone, say Germans
BRITAIN must give more to the European Union and cannot "get away" with not contributing to the eurozone rescue package, a senior German government figure has said.
The German government believes Britain should be part of a Europe-wide tax on financial transactions, the proceeds of which could help prop up the single currency.
However, David Cameron and George Osborne have blocked the tax, with the British Chancellor claiming it is a “bullet aimed at the heart of London”.
Ministers have instead called on the Germans to allow the European Central Bank (ECB) effectively to print money to rescue beleaguered economies.
Mr Cameron will travel to Berlin on Friday for what are expected to be tense negotiations with Angela Merkel, the German chancellor, over the crisis.
A senior figure in the party headed by Mrs Merkel attacked Britain as relations between the two countries deteriorated in the wake of the single currency crisis.
“I can understand that the British don’t want that [the financial transaction tax] when they generate almost 30 per cent of their gross domestic product from financial-market business in the City of London,” said Volker Kauder, the parliamentary leader of the Christian Democratic Union, said in a speech to the party congress in Leipzig.
“But Britain also carries responsibility for making Europe a success. Only being after their own benefit and refusing to contribute is not the message we’re letting the British get away with.”
EU governments are increasingly backing Germany's views, Mr Kauder said.
"Now all of a sudden, Europe is speaking German," he said. "Not as a language, but in its acceptance of the instruments for which Angela Merkel has fought so hard, and with success in the end."
In his annual foreign policy speech on Monday, Mr Cameron said the EU was out of touch and most reform or it would remain “in peril”. He called for less European integration.
However, Nick Clegg said that the European infighting should stop.
“If the whole political establishment is about to disappear into a windowless room in Brussels discussing things that no one understands, it means absolutely nothing to millions of ordinary people who are worried about their jobs, worried about economic security, worried about prospects for their children,” he said.
“The only people who will benefit are populists, chauvinists and demagogues who will exploit that lack of political leadership… At the moment, our priority is the economy, the economy, the economy.”
The row between Britain and Germany came as Barack Obama’s main economic adviser said the main threat to the American economic recovery was the euro crisis amid fears that the new Italian government will fail.
Alan Krueger, chairman of the White House Council, said the “Europeans” must urgently address the problem, in another indication that the Americans are unlikely to provide money for an international bailout. “The sovereign debt issues in Europe, the banking issues in Europe, are at the top of everybody’s list of identifiable threats,” he said.
Lawrence Summers, the former US Treasury secretary, said the rescue package approved by European leaders last month “was manifestly inadequate at the time it was reached”.
The comments were made amid growing concerns over the new Italian government. Mario Monti, the Italian prime minister, today announces the rest of his government. Mr Monti said he was “calm and convinced” Italy can overcome the crisis. However, there are signs that the new administration will not be accepted by all the political parties.
The uncertainty caused stock markets around the world to fall and the cost of Italian borrowing to rise back above seven per cent – the level which has triggered bail-outs. The cost of Spanish bonds also rose to a record high.