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Osborne: Eurozone deal must not lose momentum Osborne: Eurozone deal must not lose momentum
(40 minutes later)
Chancellor George Osborne has said the eurozone is on the "right road" but "pressure" must be kept on its leaders to put the debt deal into practice.Chancellor George Osborne has said the eurozone is on the "right road" but "pressure" must be kept on its leaders to put the debt deal into practice.
An agreement to recapitalise Europe's banks, write off 50% of Greek debt and boost the eurozone's main bailout fund was agreed on Wednesday. The deal will recapitalise Europe's banks, write off 50% of Greek debt and boost the eurozone's main bailout fund.
Mr Osborne told the BBC the road ahead would be "difficult", but Europe was now in "a much better place". Mr Osborne told the BBC Europe was now in "a much better place", but it was vital the timetable did not slip.
But the chancellor said it was vital to ensure that timetable did not slip. He also insisted the UK would not pay into any International Monetary Fund package targeted at the eurozone.
"I think the crucial thing this morning is to maintain the momentum to ensure that we don't see what happened back in July when they agreed another package but then it took months to put into place," he told BBC Radio 4's Today programme. 'Maintain momentum'
"I think the crucial thing this morning is to maintain the momentum to ensure that we don't see what happened back in July when they agreed another package but then it took months to put into place," Mr Osborne told BBC Radio 4's Today programme.
"We've got to maintain the momentum from last night and turn what was a good package into something that's got all the detail and is actually going to work in practice.""We've got to maintain the momentum from last night and turn what was a good package into something that's got all the detail and is actually going to work in practice."
The agreement - reached after marathon talks in Brussels - is aimed at preventing the Greek debt crisis spreading to larger eurozone economies like Italy.The agreement - reached after marathon talks in Brussels - is aimed at preventing the Greek debt crisis spreading to larger eurozone economies like Italy.
'Pressure paid off'
The framework for a new bailout fund, worth about 1tn euros (£880bn; $1.4tn), is to be put in place in November.The framework for a new bailout fund, worth about 1tn euros (£880bn; $1.4tn), is to be put in place in November.
Mr Osborne said there were still "very important questions" to be answered - for example about the role of China in the bailout fund - but added: "We're in a much better place this morning than we were yesterday afternoon.Mr Osborne said there were still "very important questions" to be answered - for example about the role of China in the bailout fund - but added: "We're in a much better place this morning than we were yesterday afternoon.
"The eurozone leaders have grasped the seriousness of the situation. The pressure has paid off in that respect and now we have got to maintain the pressure to put the package into pale and fill in the blank spaces that remain." "The eurozone leaders have grasped the seriousness of the situation. The pressure has paid off in that respect and now we have got to maintain the pressure to put the package into place and fill in the blank spaces that remain."
As it is outside the euro, the UK was excluded from certain parts of the negotiations, but Mr Osborne insisted Britain did have "real influence in putting pressure on the eurozone".As it is outside the euro, the UK was excluded from certain parts of the negotiations, but Mr Osborne insisted Britain did have "real influence in putting pressure on the eurozone".
Eurozone integration
He added: "It's going to be a difficult road ahead, but they are on the right road and it's massively in Britain's national interests that they sort these problems out."He added: "It's going to be a difficult road ahead, but they are on the right road and it's massively in Britain's national interests that they sort these problems out."
Mr Osborne said Britain would maintain its existing financial commitment to the IMF, but would not contribute more to any IMF fund specifically channelled into the eurozone.
"I think there's a perfectly good debate to be had about whether, given the size of the global economic problems, given the size of the global economy, the IMF should be bigger and have more resources," he said.
"But we will only contribute to resources that are available to all members of the IMF around the world. We will not contribute to a fund that is hypothecated - that is directly linked - to the eurozone."
The UK government is supporting greater fiscal integration among eurozone countries as part of tackling the current crisis.
But some critics have warned this could leave non-euro countries like Britain excluded from key political and economic decisions affecting the whole of Europe.
Justice Secretary Ken Clarke told the BBC that fear about a two-speed EU was "one of the big issue we have to address in due course".
"We obviously are going to have a distinct division between the eurozone countries and the rest, with most of the rest apart from Britain intending to be members of the eurozone eventually," he said.
"So what we have to make sure is that does not exclude us from proper participation in decision-making particularly on the single market but of course on all political issues as well."
Repatriate powers
David Cameron has said greater eurozone integration will provide an opportunity for the UK to renegotiate its relationship with Europe and to potentially repatriate some powers.
This view has been backed up by his Conservative predecessor Sir John Major, who predicted greater co-ordination between the UK and other non-euro countries like Poland and Sweden to "repatriate key policies they can't influence".
Labour's shadow chancellor Ed Balls said major governments now needed a collective strategy similar to US president Franklin D Roosevelt's New Deal to tackle the depression of the 1930s, which involved major state investment in infrastructure projects to stimulate the economy.
Writing in the Independent, Mr Balls said: "We need a new deal based on the understanding that collective austerity risks catastrophe and that, as the IMF's Christine Lagarde has rightly warned, 'slamming on the brakes too quickly will hurt the recovery and worsen job prospects'.
"A new deal that includes credible but steadier, more balanced deficit reduction plans to support the growth and jobs the world needs now - all of which should be agreed when the G20 meets in Cannes next week."