IT WAS a mistake to let Greece join the euro single currency when it did because its economy was not ready to form a monetary union with others in the club, French President Nicolas Sarkozy said yesterday.
“It was a mistake,” Sarkozy said, when asked during a TV interview about having Greece adopt the euro two years after the single currency was created. “Its economy was not ready,” he added.
And Sarkozy told French households they will have to weather a further €6-€8bn in budget cuts to compensate for faltering domestic growth that the government now sees at one per cent next year.
The cuts come on top of €11bn of savings already identified in the 2012 budget, and according to the President mean that the country could still meet its economic growth forecast of 1.75 per cent for the year.
Despite having almost no sleep following the drawn-out crunch talks on Wednesday night, Sarkozy also found time to speak on the telephone with Chinese premier Hu Jintao about the possible involvement of the world’s second-biggest economy in Europe’s bailout.
The head of the European Financial Stability Facility (EFSF), Klaus Regling, is travelling to China to promote the cause to officials face-to-face. But it looks like he will have his work cut out – China’s new agency Xinhua said yesterday that “emerging economies should not be seen as the EU’s Good Samaritans”.
UK chancellor George Osborne also brought up the latest Eurozone accord in parliament yesterday, telling MPs that “very good progress” has been made and that European leaders have “started down the right road”.
He hinted that the UK could hand over more money to the International Monetary Fund (IMF) to ensure the institution can perform its job as the lender of last resort.
But he stressed to the Eurosceptic Tory faithful that the money would not be spent directly on bailing out the single currency, even though the IMF is currently involved in rescue packages for a number of European nations including Greece and Italy.
He added that Britain would not be putting money into the EFSF, but conceded that the cash could indirectly end up helping out the Eurozone.