Gideon's moment of truth

We are approaching a moment of truth for the eurozone. After more than two years of uncertainty, instability and slow growth, decisions taken over the next few months could determine the economic future of the whole European continent for the next decade and beyond.
Despite our huge budget deficit and massive banking system, our economy is benefiting from safe-haven status because of this Government’s credible plan to deal with Britain’s debts – we have reduced the deficit by more than a quarter in just two years. Along with countries such as Germany and the US, investors are putting their money into the UK, driving down the interest rates on our government debt. Lower corporate tax rates and other reforms to make Britain open for business are also sharpening our competitive edge. But our 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 our doorstep.
I know from talking to British businesses that our country is bursting with entrepreneurial spirit and exciting investment plans that are being held back because of uncertainty about the future. That’s why a resolution of the eurozone crisis would do more than anything else to give our economy a boost.
The latest bout of uncertainty has been focused on the future of the Spanish banking system. There are already signs that a solution will be found. We should acknowledge that as each wave of the crisis has reached its peak, the countries of the eurozone have taken some very difficult decisions to defuse the pressure. But the lesson of the last two years is that treating the latest symptom does not cure the underlying condition.
I have argued for a year now that the eurozone needs to follow the “remorseless logic” of monetary union towards much greater fiscal integration. These political implications were the main reason why I and many others, including The Sunday Telegraph, campaigned against UK membership of the euro. In countries such as the UK and the US we are familiar with the features of a stable single currency area.

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