George Osborne in IMF hint after eurozone deal

George Osborne hinted today that Britain could contribute more to the IMF after a rescue package was agreed for the eurozone.

But the Chancellor sought to reassure Tory backbenchers that UK money would not be earmarked to bail out the struggling single currency area.



Markets around the world have surged after hours of tense negotiation in Brussels finally produced a deal designed to cool the crisis.



Banks have agreed to take a 50% write-off on their Greek debt holdings, and the European Financial Stability Facility (EFSF) is to be leveraged to 1 trillion euro (£880 billion).



Billions will also be pumped into vulnerable banks to protect them from failure.



The measures did not go as far as many financial experts had been demanding over recent months.



But updating MPs on the developments, Mr Osborne said the eurozone now appeared to be on the "right road".



"Our view is that last night very good progress has been made towards solving the immediate crisis, very good progress on all fronts," he said.



"But much detail remains unresolved and having put pressure on the eurozone to get this far, we have to keep up the pressure to get the details completed.



"They have started down the right road and now they have to finish the job."



He insisted that Britain will not contribute money to the EFSF bailout fund - but did concede that extra money could go to the IMF.



"Supporting countries that cannot support themselves is what the IMF exists to do and there may well be a case for further increasing the resources of the IMF to keep pace with the size of the global economy," he said.



"Britain, as a founding and permanent member of its governing board, stands ready to consider the case for further resources and contribute with other countries if necessary."



But he stressed: "We are only prepared to see an increase in the resources that the IMF makes available to all countries of the world. We would not be prepared to see IMF resources reserved only for use by the eurozone."



Speaking en route to a Commonwealth meeting in Australia, David Cameron also welcomed the deal.



"Last night they put in place the key elements needed to tackle the urgent crisis in the eurozone: strengthening the banks; building a firewall; dealing more comprehensively with Greek debts," he said.



"They made very good progress. They need to keep up the momentum and work urgently to fill in the remaining detail."



However, Tory backbenchers are already signalling their willingness to oppose any effort to boost Britain's contribution to the IMF.



Basildon MP John Baron and Amber Valley MP Nigel Mills were among those who challenged Mr Osborne on the issue in the Commons.



Mr Mills expressed concern that "the IMF does not end up supporting a currency if a country chooses not to take the right action".



Outside the chamber, Shipley MP Philip Davies accused Mr Osborne of "dancing on the head of a pin" by suggesting funds given to the international body would not end up bolstering eurozone countries.



"The last drop of goodwill has been used up for bailing out countries in the eurozone through one mechanism or another," he said.



"There is no point trying to bamboozle us with methods. It is not acceptable to bail it out through the back door."



Mr Davies repeated his threat that a rebellion over IMF funding could make this week's damaging EU referendum revolt look like a "child's tea party".



"They have used up the last drops of goodwill," he added.



Under the terms of the Brussels deal, European banks will have to increase cash buffers designed to protect against future crises - known as Tier 1 capital ratios - to 9% until next June.



Banks will be expected to try first to use private sources of capital to raise the 108 billion euro (£94 billion) needed to beef up these protective cushions but the state will step in if this is not possible.



EU leaders said they would finalise Greece's second bailout package by the end of the year, which will include a higher private sector involvement.



The private sector - predominantly financial institutions such as banks - has been asked to write off 50% of its Greek debt.



The eurozone will contribute an additional 100 billion euro bailout to this write-down in a move to lower Greek debt to 120% of GDP by 2020.



The FTSE 100 closed 3% higher as investors drew confidence from the political agreement - even though many had been calling for more debt to be written off and a larger bailout fund.



In France, the CAC index rose more than 6%, while the Dax in Germany increased by more than 5%.



Banks led the rally, with Barclays and Royal Bank of Scotland rising 18% and 10% respectively.



The euro also strengthened against both the dollar and the pound.

PA

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Bookkeeper / Office Co-ordinator

£9 per hour: Recruitment Genius: This role is based within a small family run ...

Recruitment Genius: Designer - Print & Digital

£28000 - £32000 per annum: Recruitment Genius: This Design and marketing agenc...

Recruitment Genius: Quantity Surveyor

£46000 per annum: Recruitment Genius: This property investment firm are lookin...

Recruitment Genius: Telesales / Telemarketing Executive - OTE £30k / £35k plus

£18000 - £35000 per annum: Recruitment Genius: This company specialises provid...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor