Cameron At G20: Eurozone Crisis Needs 'Tough Political Decisions'

Cameron Warns Against 'Perpetual Stagnation' Of Eurozone

Europe's leaders must be ready to take tough political decisions to resolve the eurozone crisis, or face the threat of "perpetual stagnation" or a hugely damaging break-up of the single currency, David Cameron is to warn.

Speaking a day after crucial re-run elections in Greece, the Prime Minister will put the crisis in the euro area at the top of a list of "five big threats to the global economy" and step up pressure on Germany and the European Central Bank to respond decisively.

He will urge the leaders of the world's biggest economies, gathering in Mexico for the G20 summit, to take "bold steps" to restore growth, and will warn against "backsliding" on trade protectionism and reforms to financial regulation.

Cameron is to issue a warning that the situation in the eurozone still needs 'tough political decisions' to avoid either a perpetual stagnation or a huge crisis

A failure to follow through on pledges made at previous summits to reform the banks would leave the world exposed to a repeat of the 2008 financial crash, he will warn.

No corner of the world is safe from the threats of the eurozone instability, sovereign debt, low growth, protectionism and failure to regulate the banks, the PM will say. "These five threats are very real. And let's be clear - in a global economy, they threaten us all."

Eurozone leaders including German chancellor Angela Merkel, French president Francois Hollande and Italian PM Mario Monti were expected to delay their departure until the morning in order to be in place as the shape of the new political landscape in Athens becomes clear.

Speaking to the B20 business summit in Los Cabos shortly after his arrival, Mr Cameron is expected to renew his call on the 17 eurozone states to take the steps towards closer fiscal and financial integration which he believes are necessary to restore stability.

He will call on "core" members like Germany, as well as the ECB, 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 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.

But he will warn of five threats to this vision: instability and contagion in the eurozone; debt and the "muddle-headed" belief that indebted countries can spend their way out of crisis; the failure to deliver the monetary activism and structural reform needed to deliver sustainable growth; 1930s-style protectionist barriers to trade; and the failure to complete long-term banking reforms.

With its members representing 90% of the world economy, the G20 is "the right forum to work together to deal with these threats", he will say.

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