THAT Britain remains on the sidelines of desperate attempts to defuse the eurozone crisis doesn’t make yesterday’s momentous decision in Brussels any less serious for this country. Quite the opposite. The success of the rescue package holds the key to this country’s recovery prospects. And, while British banks will not be liable, taxpayers will not be so fortunate – the UK’s additional liabilities to the International Monetary Fund remain unclear.
That the 17 members of the euro now see their finance even more inter-locked – every element must come together like a giant sudoku puzzle or failure will ensue – also poses profound questions for Britain at a time when business confidence is minimal.
While the UK remains steadfastly opposed to the single currency, Europe is crucial to trade and Britain cannot afford to be cast adrift by the likes of France and Germany. In short, David Cameron is trapped between the proverbial rock and a hard place. That said, it is still in Britain’s interests that the euro survives this crisis – the ramifications will be ruinous if this deal does not hold.
However, as John Redwood argues on the opposite page, countless questions remain unanswered despite Chancellor George Osborne’s cautious optimism.
The complex mechanism to boost the eurozone’s main bailout fund appears unfunded and hinges upon China’s assumed benevolence. What will happen if Nicolas Sarkozy’s visit to Beijing ends in failure?
Likewise, the precedent set by the decision to write off a significant proportion of Greece’s debts. Having failed to curb spending, will Athens honour its remaining liabilities? And will other near-bankrupt nations in the “Club Med”, like Italy and Spain, also expect preferential treatment – even if it means dragging down the rest of Europe?
In summary, Europe’s elite pulled off a deal that buys breathing space and little else until the next country defaults, or protesters take to the streets.
Profound questions still remain for an eurozone living on borrowed time and borrowed money – just how can Britain and Europe cut their respective deficits while also putting in place plans to stimulate growth, the key to solving this crisis?