24 Jun 2011

‘No British contribution to £120bn Greek bail-out’ – Cameron

Britain will not contribute to a 120 billion euro bailout for Greece, after Prime Minister David Cameron argued that only countries using the single currency should share the burden.

Confirmation came after late night talks at an EU leaders’ summit in Brussels.

Summit chairman Herman Van Rompuy emerged to announce that, as with the first 110bn euro lifeline to Greece last year, a desperately-needed second rescue package due to be agreed in the autumn would not involve any commitment from non-eurozone countries, including the UK.

Britain will not take part in the rescue after leaders accepted David Cameron’s argument that the bailout should be shouldered by the other 16 countries using the euro.

Germany had signalled it expected all member states to share the burden of what is likely to be another aid programme worth at least another 110 billion euro.

Britain’s only contribution to the multibillion-pound bailout will come through its membership of the International Monetary Fund (IMF), which is expected to offer further support.

'No contribution to £120bn Greek bail-out' - Cameron - Reuters

Through its membership of the IMF, the UK contributed £1.35bn to the first Greek bailout in loan guarantees – or 4.5 per cent of the IMF’s 30 bn euro loan. The Eurozone contributed the remaining 80 bn euros of the full 110bn euro loan.

The split of the second bailout has yet to be decided.

Read more: How does Greece's bailout affect Britain?

The new eurozone support is dependent on the parliament in Athens approving an austerity package put forward by Greek Prime Minister Georgios Papandreou next week. Eurozone finance ministers will meet on July 3 to finalise the deal.

Mr Cameron said: “Britain is not in the euro. Britain is not going to join the euro, but we do want a successful eurozone and a growing eurozone, not least because 40 per cent of our exports go to the eurozone.

“We want the eurozone to sort out its problems and its difficulties and we’ve been constructive in trying to make that happen.”

He added: “We were not involved in the first Greek bailout. We haven’t been involved in talks about potential Greek bailouts. So I think it was absolutely right not to use the European Financial Stability Mechanism – the EFSM – for future payments in terms of Greece.”

The UK’s share of the EFSM pot is around 15 per cent, according to the Treasury. The EFSM was originally 60 bn euros but 22.5bn euros was committed to Ireland and 26 bn euros to Portugal. Decisions on how to use it are reached by a majority vote – which means there is no UK veto.

Mr Cameron said he has been promised that it will not be used.

“I wanted to seek assurances at this European Council that Britain won’t be called upon to do that. I sought those assurances, I have received those assurances. Nevertheless I will continue to be vigilant on this issue,” he said.