David Cameron, in a major speech on the state of the UK economy, has admitted that the much beleaguered eurozone has reached a crisis point.
The prime minister considers the impasse akin to that of being at a crossroads – whatever direction is taken has profound outcomes on the fortunes of member states, the rest of Europe and indeed the wider global community.
“It either has to make-up or it is looking at a potential break-up,” he stated. “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.”
Everyone with a vested interest in the eurozone, from private investors to global institutions and professionals moving to Europe with work, will be affected by the ongoing crisis, which has, as Mr Cameron noted, entered unchartered territory.
There are, he acknowledged, some major challenges ahead, defined by the massive deficits that led to the debt crisis.
“But growth in much of the eurozone has evaporated completely,” the prime minister stated. “Indeed without the recent German growth figures, it would be in recession.”
Mr Cameron tabled a number of strategies during his speech, which included getting “low competitive” nations in the eurozone to address their deficit problems head on and establish some sort of governance system to foster confidence in the future.
Germany, which has just reported a 16-year high on immigration, with people moving overseas because of work or to boost their career prospects, is seen by Mr Cameron as essential to keeping the eurozone intact.
The reason for such a rise has been largely due to the expiration of Germany’s seven-year exemption to EU rules on the free movement of labour.
All eyes are now on the outcome of the G8 summit, which will be dominated by talks of the eurozone. In particular, world leaders will be looking at how they can prevent Greece from defaulting on its debts.