In a statement to MPs on the global economy, George Osborne addressed the volatility experienced in markets around the world and the ongoing debt crisis in Europe.
He repeatedly pointed out the deficit-reduction actions taken by the coalition government and called on other nations to follow the UK’s lead.
Osborne also reminded fellow European leaders about the “remorseless logic of monetary union” which led from a single currency to greater fiscal integration.
He said: “Solutions such as euro bonds or other forms of guarantees now require serious consideration. And they must be matched by much more effective economic governance in the eurozone to ensure fiscal responsibility is hard wired into the system.
“The break-up of the euro would be economically disastrous, including for Britain, so we should accept the need for greater fiscal integration in the eurozone, while ensuring we are not part of it and our own national interests are protected.”
Osborne also contrasted the situations in the US and the UK. He pointed out while S&P had downgraded the US, it had taken the UK off negative watch and “reaffirmed our AAA status”.
He was speaking after Parliament was recalled due to the ongoing unrest and riots around the country.
In a statement, the Prime Minister once again condemned the violence seen on streets around the country in recent days and insisted the riots were “not about politics or protest” but “theft”.
He also said homeowners and businesses would receive compensation from the public purse for riot damage under the Riot Act, whether they are insured or not, and confirmed the government would defer tax payments for businesses “in greatest need”.