10 Jun 2012

Euro zone crisis 'killing' British recovery

2:59 pm on 10 June 2012

Britain's finance minister George Osborne says the UK's faltering economic recovery is being "killed off" by the euro zone debt crisis.

In an article for the Sunday Telegraph, Mr Osborne said decisions taken by the currency bloc in the coming months could determine the economic future of the whole of Europe for the next decade and beyond.

European leaders are close to the "moment of truth" after more than two years of uncertainty, he said.

As euro zone finance ministers agreed to lend Spain up to €100 billion to prop up its banks, the Chancellor of the Exchequer said there were "already signs that a solution will be found" to the debt crisis.

Mr Osborne said Britain's recovery - already facing powerful headwinds from high oil prices and the debt burden left behind by the boom years - is being killed off by the crisis on its doorstep.

Britain has benefited along with the United States and Germany from investors seeking a safe haven from the euro zone's troubles, driving down UK borrowing costs, but the uncertainty in Europe, Britain's biggest trading partner, has stifled business investment and choked its recovery.

"A resolution of the euro zone crisis would do more than anything else to give our economy a boost," Mr Osborne wrote.