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Europe urged to slash deficits fast

Nick Clegg will urge the rest of Europe to follow Britain's example by taking immediate action to slash "unsustainable" government deficits.

The Deputy Prime Minister will insist it would be "naive" and "irresponsible" to try to wait until economic recovery is entrenched.

The comments, in a speech to the Nueva Economia Forum in Madrid, come amid continuing fears that contagion from Greece's financial woes could spread across the continent.

Mr Clegg will also move to allay suspicion among other EU states that the UK will prove a recalcitrant partner under the Tory-Liberal Democrat administration. "Let me be clear: the new UK coalition government will be a tireless supporter of a strong, prosperous eurozone, a strong, prosperous European Union," the former MEP will say.

"Economic difficulties in the eurozone directly affect Britain. Continuing instability and a lack of growth on our doorstep is the greatest threat to our own economic recovery." He continues: "As you know, we have been clear that we will not seek to join the euro. Nor will we support the transfer of new powers from Westminster to Brussels.

"But we will be utterly committed to working with you to address the grave economic challenges which we all face." Mr Clegg will warn that Europe faces "the most challenging set of economic circumstances in a generation". "A few months, even a few weeks ago, people were making the argument that fiscal consolidation had to wait until strong growth was restored," he will say.

"As you have done here in Spain, and as our new government has concluded in Britain, we no longer have that luxury. If we do not set out bold plans to bring balance to our government finances, then the task will be forced upon us.

"Market reactions to recent events in parts of Europe have dramatically restricted our margin for manoeuvre. That is the new reality, and to ignore it would be both naive and economically irresponsible."

But Mr Clegg will say that countries must not be tempted to retreat into "protectionism and beggar-thy-neighbour economics".

"The long-standing commitment to create a truly integrated market in goods and services in the European Union and the need to introduce domestic labour and product market reforms are now critical," he will say. "With limited fiscal and monetary levers available, structural economic reform is the only route to greater growth."


From Belfast Telegraph