George Osborne has stated that he would block any EU move to draw on an emergency fund containing British money for the new Greek bailout programme, having previously stated at a meeting with European finance ministers; “Britain is not in the euro, so the idea that British taxpayers will be on the line for this Greek deal is a complete non-starter. The Eurozone needs to foot its own bill”.
The Chancellor is prepared to back the European Commission’s plan for a bailout programme that draws in the entire EU, in exchange for surety that British taxpayers will be protected by guarantees that British liabilities will be underwritten.
The deal has also emerged owing to the increasing levels of mistrust between David Cameron and Jean Claude Juncker, in the wake of the latter’s decision to “tear up a binding written agreement given to Britain in 2010 that the European Financial Stability Mechanism would never again be used to rescue the Eurozone” . The plan to revive the EFSM has been denounced both by Mr Cameron and Mr Osborne, seeing it as the responsibility of the 19 members of the single currency to underwrite bailouts of Eurozone countries.
According to the Telegraph, under a compromise backed by the Commission, the EFSM rescue package could still go ahead. But Britain’s £690 million in liabilities, as well of those of other non-Eurozone states, will be insured using Greek funds known as SMP profits held by the European Central Bank .