By Simon Miller
The UK Prime Minister David Cameron has set out a three-point plan to stop the eurozone spiralling out of control.
Giving a speech in Manchester, the Prime Minister said that just as Britain had to deal with the deficit and restore competitiveness, the same was true in Europe.
Unlike Britain, said Cameron, the high deficit countries in the eurozone were unable to sustain the necessary adjustments "economically or politically" through "loose monetary policy and a flexible exchange rate".
As a result, he said the eurozone core had to do more to support demand and share the burden of adjustment.
"I welcome the opportunity to explore new options for such monetary activism at a European level, for example through President Hollande’s ideas for project bonds," Cameron said.
He also said the eurozone needed to put in place governance arrangements that "create confidence for the future".
To this end, Cameron argued that this meant following the logic of monetary union towards solutions that delivered greater forms of collective support and collective responsibility in the form of eurobonds as an example.
Thirdly, Europe's overall low productivity and lack of economic dynamism, "which remains its Achilles heel", needed to be addressed through completing the Single Market in services and digital.
"The Eurozone is at a cross-road. It either has to make-up or it is looking at a potential break-up. Either Europe has a committed, stable, successful Eurozone with an effective firewall, well capitalised and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the Eurozone," Cameron said.
He added: "Or we are in unchartered territory which carries huge risks for everybody. As I have consistently said it is in Britain’s interest for the Eurozone to sort out its problems.
"But be in no doubt: whichever path is chosen, I am prepared to do whatever is necessary to protect this country and secure our economy and financial system."