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PM in eurozone bank debts pledge

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Germany's Chancellor Angela Merkel welcomes Prime Minister David Cameron in Berlin (AP)

Germany's Chancellor Angela Merkel welcomes Prime Minister David Cameron in Berlin (AP)

Germany's Chancellor Angela Merkel welcomes Prime Minister David Cameron in Berlin (AP)

David Cameron has pledged he will not ask British taxpayers to underwrite the debts of ailing banks in Greece and Spain as he held talks with German chancellor Angela Merkel about the eurozone crisis.

The Prime Minister said he had "no doubt" that the 17 nations of the eurozone would move towards closer fiscal union within the next weeks and months.

But he made clear that Britain would not be involved in any such arrangement, which could involve the creation of eurobonds to spread the risk of borrowing across the whole single currency area.

Mr Cameron said: "I can understand why eurozone countries may want to look at elements of banking union. Because we are not in the single currency, we won't take part in the profound elements of that banking union.

"I wouldn't ask British taxpayers to stand behind the Greek or Spanish deposits. It is not our currency, so that would be inappropriate to do.

"I understand why single currency countries have to look at deeper integration. I will make sure that Britain's interests, particularly in the single market and the openness and fairness of the single market are protected. That is key for Britain."

Mr Cameron said the talks were "good and positive" but he had no announcement to make of any breakthrough in the battle to save the euro. With re-run Greek elections due on June 17, the meeting was expected to simply pave the way for summits of the G20 in Mexico and European Council in Brussels.

With calls from many quarters for the creation of eurobonds, Ms Merkel has made clear that such a move would have to come as part of closer banking and fiscal union between single currency states.

Mr Cameron was asked whether a move towards closer integration within the eurozone of the kind which Ms Merkel has advocated would trigger a referendum in the UK.

He replied: "The British people have this guarantee - and it is now written into law by this Government - which is that if power is transferred from Westminster to Brussels then we hold a referendum. That's the guarantee, that's in law, and it is right it should be there."

PA