David Cameron: British Taxpayers Will Not Rescue Greek And Spanish Banks

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CAMERON MERKEL
David Cameron speaks at a press conference with German chancellor Angela Merkel | PA

David Cameron has pledged he will not ask British taxpayers to underwrite the debts of ailing banks in Greece and Spain, as he held talks with German chancellor Angela Merkel about the eurozone crisis.

The Prime Minister said he had "no doubt" that the 17 nations of the eurozone would move towards closer fiscal union within the next weeks and months.

But he made clear that Britain would not be involved in any such arrangement, which could involve the creation of eurobonds to spread the risk of borrowing across the whole single currency area.

Mr Cameron said: "I can understand why eurozone countries may want to look at elements of banking union.

"Because we are not in the single currency, we won't take part in the profound elements of that banking union.

"I wouldn't ask British taxpayers to stand behind the Greek or Spanish deposits. It is not our currency, so that would be inappropriate to do.

"I understand why single currency countries have to look at deeper integration.

"I will make sure that Britain's interests, particularly in the single market and the openness and fairness of the single market are protected. That is key for Britain.

"We want the eurozone to succeed. We want the euro to solve the problems it faces, so that all European economies including ours can get back to healthy growth."

Mr Cameron said the talks were "good and positive" but he had no announcement to make of any breakthrough in the battle to save the euro.

In the run-up to the talks in Berlin, the PM said that "speed is of the essence" in restoring stability and market confidence in the euro, and agreed with US President Barack Obama that an "immediate plan" was needed.

But with re-run Greek elections due on 17 June, the meeting was never expected to do anything more than pave the way for summits of the G20 in Mexico and European Council in Brussels.

"It is not easy when you have got in the eurozone 17 countries, 17 governments and one currency, so I understand the difficulties," he said.

"But obviously, I am pressing the case for action to solve the financial crisis, to recapitalise the banks, build the big firewall, get growth going in Europe through structural reform and make sure there are clear and credible plans to deal with deficits.

"All of these things need to happen and Britain will keep pushing for them."

With calls from many quarters for the creation of eurobonds, Ms Merkel has made clear that such a move would have to come as part of closer banking and fiscal union between single currency states.

But she insisted that this did not mean the creation of a two-tier Europe, pointing out that Britain and other countries have held back from previous measures of integration while remaining full members of the EU.

"We are not trying to isolate ourselves from those who have not joined in," she said.

Mr Cameron was asked whether a move towards closer integration within the eurozone of the kind which Ms Merkel has advocated would trigger a referendum in the UK.

He replied: "The British people have this guarantee - and it is now written into law by this government - which is that if power is transferred from Westminster to Brussels then we hold a referendum.

"That's the guarantee, that's in law, and it is right it should be there."

Before their talks, Mr Cameron and Ms Merkel answered questions from students at a town hall event at the Federal Chancellery in Berlin.

Mr Cameron once again voiced his strong opposition to a Europe-wide financial transactions tax, which he said would simply drive jobs and growth away from the continent.

Britain's financial services industry was already "making a proper contribution" to helping get the national deficit under control, through taxes such as the banking levy, the prime minister said.

But he recognised that the mistakes made by banks in the run-up to the crash of 2008/09 had fuelled the anger seen in the movement to occupy areas of the City of London with tent cities.

"I think a lot of the anger was with irresponsibility in the banking industry and the financial industry and I think people were right to be angry because banks had made bad decisions and had to be bailed out by the taxpayer, and many of the taxpayers were earning much, much less than the people who made the bad decisions in the banks," he added.

"People were angry about that. But anger is not a policy. We need to work out what do we do, how do we regulate these organisations properly.

"We think we have responded properly to the anger."