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U.K.'s Osborne demands urgent decision on Greece

By David Stringer

Associated Press

Published: Monday, Oct. 3 2011 10:30 a.m. MDT

Britain's Chancellor of the Exchequer George Osborne speaks at Britain's Conservative Party Conference, Manchester, England, Monday Oct. 3, 2011.

Jon Super, Associated Press

MANCHESTER, England — Europe must urgently decide on the fate of Greece's crisis-wracked economy and expand the size of the continent's bailout fund, Britain's Treasury chief George Osborne said Monday.

Addressing an annual convention of his governing Conservative Party, Osborne vowed to help press European nations into decisive action.

Finance ministers from the 17 euro countries are meeting in Luxembourg to discuss Greece's ever-worsening debt crisis — talks that come a day after Athens confirmed its deficit will be higher than previously promised.

"The time to resolve the crisis is now. They have got to get out and fix their roof, even though it already poring with rain," Osborne told the convention in Manchester, northern England.

Eurozone nations are deciding whether to press ahead with a second €109 billion ($145 billion) rescue package, a move favored by Germany.

"The eurozone's financial fund needs maximum firepower," said Osborne, who will fly to Luxembourg early Tuesday to join the talks. "The eurozone needs to strengthen its banks, and the eurozone needs to end all speculation, decide what they are going to do with Greece and then stick to that decision."

Osborne used his address to party supporters to defend Britain's tough austerity measures, including an 81 billion pound ($126 billion) four-year program of public spending cuts.

He also made eye-catching comments on Britain's approach to climate change — indicating the U.K. could roll back on its ambitious targets to cut carbon emissions.

Prime Minister David Cameron previously pledged that the country's coalition administration, an alliance between the Conservatives and smaller Liberal Democrat party, would be "the greenest government ever."

But Osborne said the pace of cuts to emissions may be slowed if other European nations fail to match Britain's progress.

Osborne acknowledged that at a time of sluggish growth, the U.K. needs its European neighbors — the country's most important trading partners — to quickly correct their own ailing economies.

"Britain is not immune to all this instability. Indeed the resolution of the eurozone debt crisis is the single biggest boost to confidence that could happen to the British economy this autumn," Osborne said.

The British finance chief criticized other European nations over their decision to create the euro, insisting it had been reckless not to foresee the likely future difficulties.

"Our European neighbors plunged headlong into the euro without thinking through the consequences. How could they believe that countries like Germany and Greece could share the same currency when they have vastly different economies, and no mechanism to adjust," Osborne said.

He said those who had in the past successfully campaigned against Britain entering the euro currency deserved praise.

"For generations to come, people will say 'Thank God Britain didn't join the euro'," Osborne said.

Without the funds to pay for tax cuts or new government programs, Osborne said Britain would use credit easing in an attempt to help the country's small businesses and stimulate growth.

"I believe in lower taxes," Osborne told BBC radio before making his speech. "But you can't fund, when you have got a huge budget deficit, a permanently lower tax rate because you end up having to put the tax up next year."

Osborne said worries over competitiveness meant Britain must called into question its ambitious targets to cut carbon greenhouse gas emissions. The country has a legally mandated plan to reduce emissions by 50 percent of 1990 levels by 2025, by 60 percent by 2030, and by 80 percent by 2050.

"We are not going to save the planet by putting our country out of business," Osborne said. "So let's at the very least resolve that we are going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe."

Greenpeace policy adviser Ruth Davis said Osborne had "put red meat for party activists above global leadership," in raising the prospect of altering Britain's climate change goals.

Many stalwarts of Cameron's Conservative Party have been more reluctant to embrace action on climate change than the leader, who once toured the Arctic Circle by husky sled to study changes to the region's environment.

"Osborne just stole a line straight out of George Bush's climate playbook," said Davis. "In reality, it's in Britain's interests to lead the world on climate change."

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