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David Cameron to warn of euro-inspired economic stagnation David Cameron urges Greek parties to form coalition quickly
(about 2 hours later)
Europe's economies face "perpetual stagnation" unless leaders act to resolve the crisis gripping the euro, David Cameron is expected to warn. David Cameron has warned that any delay in forming a government in Greece "could be very dangerous".
The prime minister will increase pressure on Germany to act decisively when he addresses the G20 summit of leading economies in Mexico. Coalition talks are under way, after a centre-right party campaigning for the country to remain in the euro won the most votes in the general election.
He will also criticise the "muddle-headed" idea that countries can spend their way out of debt problems. The UK prime minister, who is at the G20 summit of major economies in Mexico, said voters' verdict was clear.
The comments come as parties in Greece attempt to form a coalition government. In a speech later, he will say European economies face "perpetual stagnation" unless the euro crisis is addressed.
The re-run election at the weekend came after politicians had been unable to form a coalition following May's contest, amid disagreements over whether to accept austerity measures. The re-run Greek election at the weekend came after politicians had been unable to form a coalition following May's contest, amid disagreements over whether to accept austerity measures.
The result of the latest deliberations could decide whether Greece, with its huge debts, leaves the eurozone, potentially increasing instability at a time when several European economies, including the UK's, are in recession.The result of the latest deliberations could decide whether Greece, with its huge debts, leaves the eurozone, potentially increasing instability at a time when several European economies, including the UK's, are in recession.
The alternative would be to accept austerity measures in return for a bailout and remaining within the single currency. This is the policy favoured by the centre-right New Democracy party, which has won the most votes.The alternative would be to accept austerity measures in return for a bailout and remaining within the single currency. This is the policy favoured by the centre-right New Democracy party, which has won the most votes.
'Sacrifices''Sacrifices'
In his speech in the resort of Los Albos, Mr Cameron will warn that the world faces five major economic threats: eurozone instability, sovereign debt, low growth, protectionism and failure to regulate the banks.In his speech in the resort of Los Albos, Mr Cameron will warn that the world faces five major economic threats: eurozone instability, sovereign debt, low growth, protectionism and failure to regulate the banks.
He will urge "core" euro members like Germany, as well as the European Central Bank, to "do more to support demand and share the burden of adjustment", warning that central banks cannot afford to "stand on the sidelines" in the current crisis.He will urge "core" euro members like Germany, as well as the European Central Bank, to "do more to support demand and share the burden of adjustment", warning that central banks cannot afford to "stand on the sidelines" in the current crisis.
Mr Cameron will say: "The reality is that there are a set of things that eurozone countries need to do. And it's up to eurozone countries whether they are prepared to make the sacrifices these entail.Mr Cameron will say: "The reality is that there are a set of things that eurozone countries need to do. And it's up to eurozone countries whether they are prepared to make the sacrifices these entail.
"The challenge is one of political will as much as economics. Of course these things are difficult to do, but just because these things are difficult does not mean we should not say them."The challenge is one of political will as much as economics. Of course these things are difficult to do, but just because these things are difficult does not mean we should not say them.
"If the eurozone is to stay together then it has to make at least some of these difficult decisions. The alternatives to action that creates a more coherent eurozone are either a perpetual stagnation from a eurozone crisis that is never resolved or a break-up caused by a failure to address underlying economic fundamentals that would have financial consequences that would badly damage the world economy, including Britain.""If the eurozone is to stay together then it has to make at least some of these difficult decisions. The alternatives to action that creates a more coherent eurozone are either a perpetual stagnation from a eurozone crisis that is never resolved or a break-up caused by a failure to address underlying economic fundamentals that would have financial consequences that would badly damage the world economy, including Britain."
Mr Cameron will say that the UK has a "clear vision" of the "stable, growing, competitive and dynamic" world economy, powered by trade and financed by strong banks, which it wishes to create.Mr Cameron will say that the UK has a "clear vision" of the "stable, growing, competitive and dynamic" world economy, powered by trade and financed by strong banks, which it wishes to create.
'Unforgivable''Unforgivable'
He will warn that G20 leaders need to show "courage, resolve and political commitment", adding: "There can be no room for timidity in meeting these threats, no ducking the essential action on fiscal discipline, monetary activism and structural reform and no backsliding on the hard-won gains of previous summits.He will warn that G20 leaders need to show "courage, resolve and political commitment", adding: "There can be no room for timidity in meeting these threats, no ducking the essential action on fiscal discipline, monetary activism and structural reform and no backsliding on the hard-won gains of previous summits.
"For the G20 to give in to self-defeating protectionism or to water down the tough new commitments on financial regulation would be unforgivable.""For the G20 to give in to self-defeating protectionism or to water down the tough new commitments on financial regulation would be unforgivable."
Britain is pushing for G20 members including the US, Russia, Indonesia and South Korea to complete the implementation of the Basel III requirements on bank liquidity and leverage agreed following the 2008 crisis.Britain is pushing for G20 members including the US, Russia, Indonesia and South Korea to complete the implementation of the Basel III requirements on bank liquidity and leverage agreed following the 2008 crisis.
Mr Cameron will say: "This is no time for caution or defeatism. The road ahead will not be easy. But I believe that we understand the steps needed to revitalise the world economy and that together we can take the bold steps necessary.Mr Cameron will say: "This is no time for caution or defeatism. The road ahead will not be easy. But I believe that we understand the steps needed to revitalise the world economy and that together we can take the bold steps necessary.
"The stakes are high, of course - incredibly high. But with courage and determination we can use these G20 and B20 summits to really begin to get to grips with these five great threats to the global economy."The stakes are high, of course - incredibly high. But with courage and determination we can use these G20 and B20 summits to really begin to get to grips with these five great threats to the global economy.
"That is the task that brings us together in Mexico. To secure our prosperity now and for generations to come.""That is the task that brings us together in Mexico. To secure our prosperity now and for generations to come."
Labour leader Ed Miliband said: "I think there is a real danger that after the Greek election results there is a sense of complacency. There is a sense that the international community can breathe a sigh of relief."Labour leader Ed Miliband said: "I think there is a real danger that after the Greek election results there is a sense of complacency. There is a sense that the international community can breathe a sigh of relief."
He added: "I am afraid what we hear from our prime minister today is simply more of the same. If I was the prime minister, I would be going to the G20 meeting of world leaders and saying there has got to be a decisive change of course towards jobs and growth."He added: "I am afraid what we hear from our prime minister today is simply more of the same. If I was the prime minister, I would be going to the G20 meeting of world leaders and saying there has got to be a decisive change of course towards jobs and growth."
Mr Cameron is attending the summit with Chancellor George Osborne and a delegation from 25 leading UK companies, including Diageo, Rolls-Royce and Virgin Atlantic.Mr Cameron is attending the summit with Chancellor George Osborne and a delegation from 25 leading UK companies, including Diageo, Rolls-Royce and Virgin Atlantic.