“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”.
Britain, which does not use the euro, has already said it will resist contributing to any bridge financing to get Greece through several huge payments, including 4.2 billion euros ($4.62 billion) owed to the European Central Bank (ECB) on July 20.
British Finance Minister George Osborne rejected any attempt to use an EU-wide emergency fund, the European Financial Stabilization Mechanism (EFSM), to underwrite bailouts of Eurozone countries.
“We should be clear that there is no proposal on the table”, a spokeswoman for Cameron said.
He was backed by Prime Minister David Cameron.
But leading Tory Eurosceptic John Redwood has called the latest proposal to use United Kingdom collateral to prop up Greece an “absolute outrage” while Ukip said it shows Britain has “no influence in European Union spending”.
This is an essential step since Monday’s bailout deal specifies International Monetary Fund involvement in any future aid program, but the IMF’s rules mean it cannot help Greece while it is in arrears.
Downing Street accepted at the time that it was not legally binding, but the PM told the Commons it was stated “in black and white the clear and unanimous agreement that from 2013 Britain will not be dragged into bailing out the Eurozone”.
“From the discussions that have been taking place this morning, it’s clear that a number of other countries have concerns about this”.
Instead, responsibility was supposed to fall only on member states using the single currency under a new permanent mechanism specifically set up to deal with crises like that in Greece.
The Greek parliament has voted overwhelmingly to pass austerity measures demanded by global creditors, paving the way for a multi-billion pound rescue of the country from financial ruin.
“We are looking at all the instruments and funds that we could use and all of them seem to have disadvantages or impossibilities or legal objections”, Dutch Finance Minister Jeroen Dijsselbloem, chairman of the group of euro ministers, told reporters on Tuesday in Brussels.
But in 2010 a promise was made to the United Kingdom that the EFSM would not be used for Eurozone bailouts and would be replaced by the European Stability Mechanism, which is only funded by countries in the Eurozone.
“We are therefore working on arrangements to protect the non-euro area states from any negative financial consequences should the EFSM loans not be repaid”.
Mr. Osborne would not be able to unilaterally veto such a move and must rely on the support of sufficient other member states to block it under a system of voting weighted as indicated by relative size.
