Coalition split over £35bn bill for euro bailout
Danny Alexander contradicts PM's pledge that Britain will not pay for Greece rescue
Andrew Grice has been Political Editor of The Independent since 1998. He was previously Political Editor of The Sunday Times, where he worked for 10 years, and he has been a Westminster-based journalist since 1982. His column, Inside Politics, appears in The Independent each Saturday.
Monday 07 November 2011
David Cameron will today come under pressure to spell out whether taxpayers will pay towards eurozone bailouts, after it emerged that Britain could lend a further £35bn to the International Monetary Fund (IMF).
Danny Alexander, the Liberal Democrat Chief Secretary to the Treasury, said he was happy for IMF funds to be used to help Greece. He appeared to adopt a different stance to Mr Cameron, pictured below, who has reassured Eurosceptic Conservative MPs that Britain will not bail out eurozone nations.
Mr Alexander said the UK could guarantee up to £40bn for the IMF without another vote in Parliament, since that ceiling was approved by MPs in July. So far, only £5bn has been committed.
The Treasury minister told the BBC's Andrew Marr: "The IMF was a British invention. That's why we should be supporting it. No country in the global economy can be an island – we are in an interdependent world. We have to play a role as a global leader, as one of the largest economies in the world.
"We're not actually handing over cash – it is a promise to pay to back up the IMF's lending if things go wrong. But it's worth pointing out, too, that no government has ever lost money in terms of the resources we've made available to the IMF."
Last week's summit of G20 leaders in Cannes agreed to give more firepower to the IMF if it was needed, but could not agree on a figure. Mr Cameron said afterwards: "Britain will not contribute to the eurozone bailout fund. And we are clear that the IMF will not either."
The Prime Minister, who is expected to make a Commons statement on the summit today, faces questions from Tory Eurosceptics and the Labour opposition over Britain's likely new commitments to the IMF and whether the money could be used to prop up ailing economies. Tory MPs, 81 of whom defied Mr Cameron last month by voting for an EU referendum, admit that he may be able to avoid another Commons vote on the IMF contribution on a technicality. But they warned that by dodging a vote, he would risk a rebellion later. They fear the public will feel they have been hoodwinked if the UK underwrites a bailout via the IMF.
Eurosceptics seized on a YouGov poll for The Sunday Times, showing that 55 per cent of people agreed with the statement: "Britain is not in the eurozone and has its own problems. We should not contribute any money to help solve the debt crisis." Only 26 per cent agreed that "an economic crisis in the eurozone would have a major impact on Britain's economy, and it should contribute money to help solve the crisis."
Labour argues that the European Central Bank (ECB), rather than the IMF, should rescue the euro and voted against the extra IMF resources in July – along with 31 Tory MPs. Ministers do not want to risk any Commons votes in which Labour and Eurosceptics might join forces, since they could defeat the Government.
Some Tories may register their discontent at Mr Cameron's approach to the issue tomorrow by rebelling when the Commons debates European Commission plans for a five per cent rise in the EU budget in 2014-2020. But Labour sources say the party's MPs are unlikely to vote against the Government, which is fighting for a smaller increase.
Douglas Alexander, the shadow Foreign Secretary, said: "The ECB needs to be delivering more firepower. That shouldn't be at the cost of the IMF being willing to act if necessary in future."
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