UK's Cameron calls for euro contingency plans

CAMP ROUND MEADOW, Maryland Sat May 19, 2012 3:02pm EDT

Britain's Prime Minister David Cameron (2nd R) talks with Germany's Chancellor Angela Merkel (foreground) as U.S. President Barack Obama (L) and Russia's Prime Minister Dmitri Medvedev (R) listen at the start of the first working session of the G8 Summit at Camp David, Maryland May 19, 2012. REUTERS/Andrew Winning

Britain's Prime Minister David Cameron (2nd R) talks with Germany's Chancellor Angela Merkel (foreground) as U.S. President Barack Obama (L) and Russia's Prime Minister Dmitri Medvedev (R) listen at the start of the first working session of the G8 Summit at Camp David, Maryland May 19, 2012.

Credit: Reuters/Andrew Winning

CAMP ROUND MEADOW, Maryland (Reuters) - British Prime Minister David Cameron urged countries on Saturday to put in place strong contingency plans to deal with fallout from the euro zone debt crisis as fears grow that Greece could be forced out of the European single currency.

Cameron, speaking at a summit of the Group of Eight major economies, also appeared to hint that the European Central Bank should follow the example of the Bank of England by embarking on an asset purchase program to try to boost the economy.

"What is required is a sense of urgency and then clear actions for strong banks, strong deficit reduction plans, strong governance and strong contingency plans for whatever might happen," Cameron told reporters, setting out what he believes must be done to tackle the euro zone crisis.

Cameron has stepped up his warnings this week that the euro zone needs to act swiftly to solve its debt crisis, saying on Thursday that Greece was "on the brink" and the survival of the euro was in question.

British officials are deeply worried about the impact that a breakup of the euro and a further deterioration of the euro zone crisis could have on Britain's recession-hit economy.

Britain is outside the euro zone but about 40 percent of its exports go to the single currency bloc.

After early morning talks on the economy with U.S. President Barack Obama while both leaders worked out at the gym, Cameron said he detected a "growing sense of urgency that action needs to be taken" on the euro zone crisis.

"We are addressing here the two biggest threats to all our economies and that is of course the euro zone crisis but also the very high oil prices that translate into high prices at the pumps and we are making progress on both," he told reporters.

Group of Eight leaders meeting at the U.S. presidential retreat of Camp David, Maryland, backed keeping Greece in the euro zone and vowed to take all steps necessary to combat financial turmoil while revitalizing their economies.

Cameron appeared to call on the ECB to take a more accommodative monetary stance to lift growth in the euro zone.

"Clearly, just as Britain benefits from a strong government with a strong deficit reduction plan and strong banks but also an independent monetary policy giving us low interest rates, helping to push demand in the economy, so the euro zone I believe needs that approach as well," he said.

A government source said Cameron's comment was a veiled suggestion that the ECB should copy the quantitative easing program followed by the Bank of England.

The Bank of England has bought 325 billion pounds ($520 billion) of government debt with newly created money to try to boost Britain's ailing economy.

The ECB has taken its own crisis measures to avert a financial meltdown in the euro zone, putting more than 1 trillion euros ($1.3 trillion) of low-cost, three-year funds into the banking system since the end of December.

(Reporting by Adrian Croft; Editing by Vicki Allen)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

A tourist takes a plunge as she swims at Ngapali Beach, a popular tourist site, in the Thandwe township of the Rakhine state, October 6, 2013. Picture taken October 6, 2013. REUTERS/Soe Zeya Tun (MYANMAR - Tags: SOCIETY) - RTR3FOI0

Where do you want to go?

We look at when to take trips, budget considerations and the popularity of multigenerational family travel.   Video