Britain could face a bill of up to £850m for latest Greek bailout as European leaders desperately search for money for the heavily indebted nation.
Although Britain is signed up to an emergency EU fund, Prime Minister David Cameron believes he has won an opt-out as the UK is not a member of the Eurozone. However, EU Commission President Jean Claude-Juncker is desperate to raise funds to keep Greece in the euro.
Greece needs €12bn to prevent it going into economic meltdown, and Britain could face £850m in liabilities if it is ordered to join the bailout. Any such move would likely enrage Conservative Eurosceptics and seriously weaken David Cameron’s attempts to EU renegotiation, thus playing into the hands of UKIP.
Chancellor George Osborne has promised to fight attempts to raid British taxpayers’ money to pay for Greece, with a Treasury source saying: “Our Eurozone colleagues have received the message loud and clear that it would not be acceptable for this issue of British support for Eurozone bailouts to be revisited.
“The idea that British taxpayers’ money is going to be on the line in this latest Greek deal is a non-starter.”
Britain was originally signed up to the European Financial Stabilisation Mechanism (EFSM), a €60bn fund, until it was “deactivated” in 2011 after the EU created a bigger and more flexible fund that did not include Britain.
At the time, European leaders agreed that the EFSM “will no longer be needed [and] should not be used for such purposes”.
Cameron said: “I sought those assurances, I have received those assurances. Nevertheless, I will continue to be vigilant.”
However, an EU official told The Times that the decision was merely “political” and “it can be argued that it does not prevent the activation of the mechanism.” She added: “It was a political agreement. At that time [Cameron] was correct, but the clause can be activated. The regulation can be reactivated.”
France already wants to bring back the EFSM, and if German Finance Minister Wolfgang Schäuble agrees, George Osborne could find himself outvoted.
The Greek parliament is due to vote on the latest bailout deal in the coming days, and although it is expected to pass it could cause deep divisions within the ruling Syriza party.
George Katrougalos, Greece’s Reform Minister, said: “Clearly the Europe of austerity has won. Either we are going to accept these draconian measures or it is the sudden death of our economy. It is an agreement that is practically forced upon us.”