European politicians are apparently bracing for when – not if – the Greeks leave the euro.
It was up to the prime minister to re-draw the lines of debate on the economy, after alluding to the “make up…or breakup” position of the eurozone in yesterday’s PMQs.
Speaking in Manchester this morning, Mr Cameron said: “Either Europe has a committed, stable, successful eurozone with an effective firewall, well capitalised and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the eurozone.
“Or we are in unchartered territory which carries huge risks for everybody.”
What risks exactly? The Centre for Economics and Business Research has it at $1,000,000,000,000 – one trillion dollars for a badly-managed Greek exit from the euro. A more considered departure might impact global GDP by less than half that.
Some of Cameron’s critics may be suggesting a move in the direction of Francois Hollande, in many ways on the opposing side of the growth versus austerity debate that Cameron is currently trying to win at home.
In their first meeting yesterday, Angela Merkel and Hollande pledged that growth measures would be “considered” providing Greece stayed in the eurozone.
Nevertheless Cameron’s territory will remain unchartered until the second Greek election takes place on 17 June. Many commentators agree that the SYRIZA, the Coalition of the Radical Left, looks good heading into the second vote – headed by a younger, charismatic leader in Alex Tsipras, whose party has been picking up smaller leftist, green and anti-austerity parties on the way.
A recent NET television poll gave SYRIZA 27% of the vote, 10 per cent more than its electoral showing days before. A government headed by SYRIZA would presumably precipitate Greece’s exit from the euro, the only question is: how that is going to happen.
But if today’s speech is anything to go by, the government is sticking to Plan A. “We are moving in the right direction,” Mr. Cameron said. “Not rushing the task, but judging it carefully.
“We are doing everything we can to return this country to strong, stable economic growth.”
As Labour retains its 10-plus point lead in the polls this week, Cameron will be looking to persuade voters that austerity is the right way out of recession. In the meantime he will be hoping events on the continent prove him right.
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