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 celebration of British elections
  • Get to the point
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

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Recruitment Consultant / Account Manager - Surrey / SW London

£40000 per annum + realistic targets: Ashdown Group: A thriving recruitment co...

Ashdown Group: Part-time Payroll Officer - Yorkshire - Professional Services

£25000 per annum: Ashdown Group: A successful professional services firm is lo...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before