Cameron cautions against delay as Greeks seek to form coalition

Speaking at a G20 summit in Mexico, the Prime Minister said that by backing the centre-right New Democracy party in the re-run elections, the Greek people had “made their choice to stay in the euro” and a government should be formed that is prepared to deliver on promises made in return for multibillion-euro bailouts.

But he also called on the other eurozone countries, and particularly Germany, as well as the European Central Bank to take “bold steps” towards fiscal and banking union which he believes are necessary to solve the underlying problems with the single currency.

Last night the leader of the New Democracy party, Antonis Samaras, confirmed talks were under way to form a coalition, saying he wanted to form a “national consensus” on how to move forward.

The elections had been watched closely by world leaders, with many fearing the far-left party Syriza party, which pledged to exit the eurozone and reject Greece’s austerity programme, would win power. A Greek exit would have had potentially catastrophic consequences for other ailing European nations, with damaging repercussions for the global economy.

The vote, however, appears to have done little to calm the markets, with initial rallies quickly reversed amid uncertainty over when a coalition government would be formed, and whether it will last. Fresh fears about the Spanish economy, as its borrowing costs rose to levels that forced Greece, Ireland and Portugal to seek bailouts, triggered a pummelling for bank shares.

“The Greek people have now made their choice to stay in the euro, to accept the consequences of what that involves,” said Mr Cameron. “Those parties that believe that need to get into government, need to deliver that. Delay is always dangerous in these situations. It is in our interests in Britain that these issues are resolved decisively and swiftly and that is what we are urging people to do today.”

In an earlier speech to a business audience, Mr Cameron said it was up to the eurozone countries to decide if they were prepared to make the necessary sacrifices to resolve the crisis.

“The challenge is one of political will as much as economics,” he said. “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.”

Mr Cameron also moved to caution against placing all the blame for the failure to make progress in the eurozone on Berlin. “I can quite understand the concern the Germans have. Their taxpayers have been asked to put a lot of money into Greece, they have done that and so they want the Greeks to stick to their side of the bargain. That’s what the Germans are saying.

“The truth is that everyone in the eurozone is going to have to take difficult decisions in order to make the system work properly and deliver an easing of the crisis, which we all want to see – and it affects us in Britain too.”

Mr Cameron was expected to join German chancellor Angela Merkel, Mario Monti of Italy, and Francois Hollande of France, with United States President Barack Obama last night to discuss the way forward for the single currency