U.K. finance minister George Osborne has called upon his euro zone peers to do whatever it takes to ensure stability, indicating the British government would back a so-called euro bond to avoid a disastrous break up of the euro.
Osborne told lawmakers in the U.K. that the barriers to such a deal, and fixing the euro zone’s imbalances, were “political, not economic.”
The comments will put pressure on the euro zone’s two largest economies, Germany and France, to agree to measures that could draw a line under the sovereign debt crisis.
German Chancellor Angela Merkel and French President Nicolas Sarkozy were reported earlier Thursday to be meeting next week to discuss euro zone governance. The news helped to restore a degree of calm to European markets after another morning of volatile trading.
Germany, the euro zone’s largest economy, would have to bankroll the creation of any such bond. It has been the most reluctant to take any such measures, due to the impact on its own borrowing costs.
Osborne said the British economy, while not immune from the shocks to the global economy, is seen by many investors as a safe-haven, thanks to the austerity measures imposed by the coalition government.
He told Members of Parliament that the yield on British sovereign debt was now the lowest it had been for over one hundred years. And he said Standard & Poor’s had also reversed its negative outlook for the British economy due to the austerity measures he put in place.