Greek crisis 'must be resolved'

---

The chancellor has said that Eurozone countries must come to a decision on how to deal with the Greek crisis.

"In short, we need a comprehensive solution which ring-fences vulnerable Eurozone countries, recapitalises Europe's banks and resolves the uncertainty about Greece," George Osborne told the Commons.

"Ring-fence. Recapitalise. Resolve."

He said the lack of an agreed plan is "causing great instability for the whole world".

"Our advice to European neighbours about what needs to happen is provided in private, but our overall intent is very public," he said.

"The speculation about Greece's future needs to end.

"The eurozone needs to come to a clear decision now and stick to it."

Osborne said a solution to the financial crisis in Greece must be agreed before the G20 meets in Cannes in four weeks.

"That decision needs to be based on a realistic assessment of what is really happening in Greece and the debt dynamic of that country's economy."

Osborne said the Eurozone members must increase the firepower of their bailout fund.

"If you're trying to protect larger countries €440 billion is sadly not enough," he told the House.

"How they do so – whether by using more paid-in resources, more leverage, or more help from the ECB – is up to them.

"What I can confirm is that Britain will not be a part of any permanent Eurozone bail-out fund.

"We have provided a bilateral loan to Ireland with the support of this House, in recognition of our exceptionally close economic and social ties.

"But when we came to office we inherited a situation where we were part of the EU-wide temporary bail-out fund.

"As the price we have extracted for ratifying the treaty change that creates the permanent bail-out fund, British taxpayers have made no contribution to the Eurozone bail-out of Greece and will not be part of the permanent fund."

Shadow chancellor Ed Balls said his party had warned last year that claims the UK was "out of the danger zone" were premature.

"The global hurricane is now swirling around us," he told MPs.

"We warned that to rip out the foundations of the house here in Britain with a reckless approach to deficit reduction was the wrong approach."

Balls accused the chancellor of changing his mind on quantitative easing, or printing money to boost the economy.

Osborne, who had previously called QE "the last resort of desperate governments", explained that Britain "could not be immune from what was happening on our doorstep".

"That is the principal reason given by the independent MPC for their decision to request authorisation to undertake further quantitative easing," he told the House.

"I made it clear last year that I would follow exactly the same procedures that my predecessor established.

"I therefore agreed to the request and authorised a further £75 billion of asset purchases.

"I think this is the right response to the deterioration in the international situation."