“The coming months are critical for the future of Europe. Jobs and business investment – in Britain and across the euro area – depend on Europe’s leaders choosing the right course.
The risk is that Europe gets locked into a false choice between growth and deficit reduction. The truth is that we need the right combination of both – action now to get Europe’s economies growing and creating jobs, tough medium-term action to get public finances back into shape and a long-term strategy for increasing the continent’s productivity and skills base.
It is true that the two of us disagreed on the case for British membership of the single currency. We agree, however, that the single currency needs to survive and succeed – and we are worried that Europe has so far identified only half the solution. There is a real danger that binding countries into ever larger cuts and tax rises to meet the new structural deficit and debt targets will become self-defeating, economically and politically.
A collective strategy that is choking off demand is compounding Europe’s problems – just as it has done in Britain, where our economic recovery has stalled. Investors are now worrying that the policy mix has become unbalanced, to the detriment of economic recovery. We need a new strategy that permits a more sustainable approach to debt reduction through growth and long-term fiscal responsibility.”
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