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Osborne: Eurozone deal must not lose momentum Osborne: Eurozone deal must not lose momentum
(about 3 hours 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.
He also insisted the UK would not pay into any International Monetary Fund package targeted at the eurozone.
The deal will recapitalise Europe's banks, write off 50% of Greek debt and boost the eurozone's main bailout fund.The deal will recapitalise Europe's banks, write off 50% of Greek debt and boost the eurozone's main bailout fund.
Labour welcomed the agreement, but said the "missing piece" was a plan to boost growth and create jobs across Europe.
Mr Osborne told the BBC Europe was now in "a much better place", but it was vital the timetable did not slip.Mr Osborne told the BBC Europe was now in "a much better place", but it was vital the timetable did not slip.
He also insisted the UK would not pay into any International Monetary Fund package targeted at the eurozone.
'Maintain momentum''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."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.
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 place 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. 'Many questions'
"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. In a statement later to the House of Commons, Mr Osborne said there may be a case for further increasing the budget of the IMF to keep pace with the size of the global economy.
"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." But he said: "Let me be very clear, we are only prepared to see an increase in the resources the IMF makes available to all countries of the world.
"We would not be prepared to see IMF resources reserved only for the eurozone."
For Labour, shadow chief secretary to the Treasury Rachel Reeves said there remained "many unanswered questions" about how the deal would work in practice.
"Isn't the missing piece in this agreement a lack of any plan for jobs and growth - not mentioned at all in the statement by the chancellor?" she said.
"Isn't it the case that without growth we cannot solve the debt crisis, we cannot solve the banking crisis and we cannot solve the jobs crisis either?
"Britain should be leading the charge for a proper plan for jobs and growth across Europe."
'Caucusing'
The UK government is supporting greater fiscal integration among eurozone countries as part of tackling the current crisis.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. But some critics have warned this could leave non-euro countries like Britain, Sweden and Poland excluded from key political and economic decisions affecting the whole of Europe.
Mr Osborne told MPs that David Cameron had dinner with the Swedish and Polish prime ministers on Wednesday night to discuss that very risk.
And he said Britain had to be "alert to the danger" of the 17 members of the eurozone "caucusing on areas which should legitimately be the preserve of the 27 [European Union members]".
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".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."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.""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.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".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."