UK REACTION:THE EURO crisis has exposed, but not created, the need for major reforms and greater co-operation in the European Union, former British prime minister Tony Blair has said.
“The fact is that the choices are very, very difficult and painful. They are painful if we take the measures to stabilise the single currency if the single currency broke up it would be catastrophic,” he said.
Meanwhile, Prime Minister David Cameron is facing increasing pressure from Conservative backbenchers and others to lead the 10 non-euro EU member states, to ensure that they do not lose out from changes made to cope with the crisis.
Saying that the euro zone crisis is the EU’s biggest challenge since its creation, Mr Blair said: “There has never been a tougher time to be a leader than right now. The decisions are immensely difficult but they have got to be taken.”
The whole weight of the EU and all of its institutions must now “come behind” the euro, if it is to be preserved, said Mr Blair, who had favoured the UK’s membership of the currency in the late 1990s, but who was opposed by his chancellor, Gordon Brown.
Strong rules to govern tax and spending in the EU will have to be created, he said, along with “major reforms” of welfare rules in member states and the EU’s own budget.
“If you put that long-term framework in place there is at least a far-better chance of stabilising the short-term situation,” Mr Blair said.
He acknowledged Germany’s opposition to the European Central Bank buying even more bonds from under-pressure euro zone countries, but he warned the consequences of not doing so are even worse.
“What we could have done to stabilise this situation a few months back. You now have to do even more if you are going to stabilise it today. You have got to say it, mean it and do it. I am not underestimating the difficulties of that or the huge problem that Germany has got in giving such a pledge. “On the other hand, if the single currency breaks up that is also a devastating blow for Germany,” he said.
Conservative MPs have reacted with concern to indications that Mr Cameron has made clear to German chancellor Angela Merkel he will make modest demands as the UK’s price for amending existing EU treaties.
However, most backbenchers insist that the opportunity must be used to ensure the repatriation of all powers over employment laws from Brussels – a move that would threaten the Conservative-Liberal Democrat coalition’s existence.
Meanwhile, there is mounting pressure on Mr Cameron to take a more hands-on role in the crisis, particularly in co-ordinating the actions of the 10 non-euro EU member states who will be affected by any move towards the creation of a two-speed EU.
Backbenchers insist Mr Cameron should speak directly with the leaders of the other nine states
