14 Nov 2011

Warning by Blair over consequences of euro collapse

6:06 am on 14 November 2011

Former British prime minister Tony Blair says a collapse of the euro would be "catastrophic" - and Europe must get behind it.

Mr Blair told the BBC that he hoped it would not collapse, but European leaders faced "very difficult and painful" choices.

In an interview on Sunday, Mr Blair said the "whole weight" of European institutions, including the European Central Bank, had to stand behind the euro and a "long-term" frame work was needed.

"Major reforms" were needed to the European social model and European budget, as well as more "strong fiscal co-ordination" and he warned European leaders not to get "behind the curve" in their decisions.

"The myth that the Italian and German economies were the same - that 10-year myth has now evaporated,'' said Mr Blair.

Measures needed to stabilise the single currency would be painful, but "it would be catastrophic if the single currency broke up."

Mr Blair said he believed the crisis had exposed the need for reform - but ageing European populations, and the state of welfare, government and public services meant change was always necessary.

UK Chancellor George Osborne also told the BBC on Sunday that there would have to be more co-operation between eurozone countries on financial issues - as long as the EU could still work for members which were not members of the euro.