Bloomberg News

Osborne Says G-20 Expects ‘Impressive’ Euro-Area Solution

October 15, 2011

(Adds comments from Osborne from fourth paragraph. See {GMEET <GO>} for more on the G-20 meeting.)

Oct. 15 (Bloomberg) -- U.K. Chancellor of the Exchequer George Osborne said the world is expecting leaders from the euro area to deliver an “impressive” set of measures next week to put a stop to the crisis engulfing the region.

Osborne said finance ministers from Group of 20 nations have heard from European colleagues of the “action they are working on” to resolve the two-year-old crisis. Talks at the G- 20 Paris meeting today on whether the International Monetary Fund’s resources should be boosted must be no substitute for action from euro-area countries, Osborne said.

“I think they will have left Paris under no misunderstanding that there is a huge amount of pressure on them to deliver a solution to the euro-zone crisis,” Osborne told reporters today. “The Oct. 23 European council is the moment people are expecting something quite impressive.”

Osborne is lobbying European neighbors for a solution to the crisis as the U.K. faces the risk of falling into recession for the second time in three years. The economy has barely grown in the last 12 months and unemployment touched a 15-year high in the quarter through August as Osborne drives through the biggest squeeze in public spending since World War II.

Revamped Strategy

Euro-area finance chiefs are revamping their strategy to combat the debt turmoil, people familiar with the plans said yesterday. Efforts include a plan to write down Greek bonds by as much as 50 percent and establish a backstop for banks, the people said.

The G-20 is pushing the European Union to maximize the power of its regional rescue fund and to avoid contagion. Osborne today said that Europe has become “the epicenter of the world’s current economic problems.”

The European effort comes as G-20 nations including China and Brazil seek to boost the resources of the IMF so that it can come to the rescue of indebted countries such as those in Europe.

Osborne said the U.K. backs expanding the IMF’s resources while warning that those talks shouldn’t distract Europeans from finding a solution to their own problems.

“We have indicated our willingness to consider additional resources,” Osborne said. Any change “should not be considered a distraction by euro-zone countries.”

IMF Managing Director Christine Lagarde told member countries last month that her current $390 billion war chest may not suffice to meet all loan requests should the global economy worsen. Additional funds could be used to help shelter Italy and Spain with precautionary lending, the people said.

--Editors: Matthew Brockett, Simone Meier

To contact the reporter on this story: Gonzalo Vina in Paris at gvina@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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