23/Aug/2014 - Last News Update: 13:55

Nick Clegg: 'Not rational' to support Greek exit

Category: Politics

Published: 24th May 2012 03:48:28

Greece exiting the euro is something "no rational person" should advocate and would cause "irrevocable damage", Nick Clegg is expected to say later.

In a speech in Berlin, the deputy prime minister is also likely to criticise European leaders' "fragmented" response to the eurozone crisis.

He will say the way decisions are taken is undermining public confidence.

Meanwhile, a group of Conservative MPs says the government should draw up far-reaching plans in case the euro fails.

The Free Enterprise Group said in the event of "Eurogeddon", benefits would have to be frozen and small firms made exempt from many employment regulations like the laws on unfair dismissal.

Low-paid flexi-jobs, exempt from tax and many employment regulations, should be created and the government should issue new infrastructure bonds to provide funds for capital projects such as roads or new runways, the group said.

The tree is falling, and we are pruning one leaf at a time”

Mr Clegg's speech, at an event to launch the Queen Elizabeth prize for engineering, will come hours after EU leaders said they wanted Greece to remain in the eurozone.

European Council President Herman Van Rompuy told an informal EU summit that Greece should stay in but "respect its commitments".

He said vital reforms were essential for the country to overcome its economic problems.

There are fears Greece may have to exit the single currency because of its economic crisis, and the eurozone is said to be preparing for such a scenario.

Mr Clegg is due to say: "As Europeans, our response to this brewing crisis has been woefully fragmented. We have failed on a number of fronts.

"The way we take decisions is undermining public confidence. Every few weeks European leaders sit down to yet another crisis summit, where another temporary solution is agreed.

"The tree is falling, and we are pruning one leaf at a time. It is piecemeal politics; endless tactics with no strategy."

He will go on to insist the crisis must be solved "at the European level" and will stress the inter-dependence of European countries, including the UK.

He is expected to warn that the withdrawal of Greece from the euro would cause "unpredictable, irrevocable damage" to the single currency.

He will challenge "the fashionable assumption being whispered behind cupped hands" that Greece's exit could be a good thing for the rest of Europe.

"No rational person interested in the wealth and wellbeing of Europe's citizens could advocate taking such a risk: not with Greece's future, or our own," the Liberal Democrat leader will say.

What is needed to solve the crisis is either to "share common debt, or change the way money is transferred" between eurozone countries, Mr Clegg will say.

"You cannot have a monetary union in which one country saves, exports and invests and another spends, borrows and consumes without some mechanism to make it all add up."

He is expected to say "new fiscal instruments" like so called shared-debt eurobonds, as well as making the European Central Bank "a lender of last resort" are the means through which the crisis can be solved.

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BBC News, 2012. Nick Clegg: 'Not rational' to support Greek exit [Online] (Updated 24th May 2012)
Available at: http://www.ukwirednews.com/news/1430562/Nick-Clegg-Not-rational-to-support-Greek-exit [Accessed 23rd Aug 2014]

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