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Eurozone crisis ‘real danger to all of Europe’ says George Osborne as he arrives for Brussels summit

George Osborne warned European colleagues they were running out of time to send a 'clear signal' that they were dealing with the eurozone crisis.

The eurozone crisis is ‘a real danger to all of Europe’s economies’ said George Osborne as he arrived in Brussels for a summit to try and sort out a fix.

If EU finance ministers finally agree what to do it would be the biggest boost for the British economy this autumn, said the Chancellor.

‘What we’re going to be arguing for at this meeting is a comprehensive solution to this crisis. We’ve had enough of short-term measures, sticking plaster that just gets us through the next few weeks.’

Mr Osborne repeated the government’s case that a secure and stable euro is as important for the UK as it is for the single currency member states:
‘The crisis of the eurozone is a real danger to all of Europe’s economies, including Britain’s.

‘We need to address the root causes of the problem with a lasting solution that will help all of Europe’s economies.’

A hectic series of EU meetings likely to last until at least Wednesday began last night with talks between the 17 eurozone finance ministers.

Amid growing fears that the Greek crisis is even worse than feared, they approved another slice of bail-out aid – about £7billion and, according to eurozone leader and Luxembourg prime Minister Jean-Claude Juncker, paved the pay for a massive 50 per cent write-down of Greek debt to ease the country’s burden.

Today all 27 finance ministers were assessing the broader picture and abscessing the risk of ‘contagion’ from Greece to other, much bigger economies, including Italy. They are also finalising plans for a recapitalisation of banks, making them better placed to withstand future economic shocks.

Tomorrow Prime Minister David Cameron flies in to join other EU leaders for a summit already downgraded by a Franco-German decision to hold another one, probably next Wednesday. The key to success could be a private meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy in Brussels later today. They are in the driving seat but have clashed in the last few days over the details of shoring up the euro and persuading jittery financial markets that single currency is solid.

In particular they differ over boosting an existing €440billion (£383billion) bail-out fund possibly four-fold to about €2trillion (£1.74 trillion).

Mr Osborne said resolving the crisis was now ‘critical’ – the single biggest issue which could boost the British economy and revive growth not just in the eurozone but across the world.

But the effective downgrading of Sunday’s EU leaders’ summit means the weekend meetings will merely pave the way for a hoped-for deal at Wednesday’s planned summit, also in Brussels.

However, some ministers, including Mr Osborne, have set the ultimate deadline as a G20 summit in Cannes in less than a fortnight, when world leaders gather to discuss the global financial crisis.

Host will be President Sarkozy, who is desperate to deliver EU unity without agreeing a eurozone solution which will be rejected by his voters as too expensive. Chancellor Merkel is in the same boat, and the pair are determined to resolve their differences and produce a solution which ring-fences the worsening Greek crisis – and is seen as doing so by volatile financial markets.

‘The perception is as important as the reality’ said one EU official. ‘When deciding what to do ministers have to consider not just what they need to do financially but what they need to do to calm markets – and the two things are not necessarily the same thing.’

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