Ministers fear Greece's €130bn bailout will not be enough

Alistair Darling said he was 'very sceptical' about the deal and that Greece would soon ask for more money

British ministers doubt that the €130bn (£109bn) bailout for Greece will prove enough to rescue the country's stricken economy and suspect it will eventually leave the euro.

Although David Cameron and George Osborne welcomed the deal in public, ministers and Treasury officials are sceptical about whether Greece will have the stomach for the painful austerity measures it requires – not least because an election is expected in April or May.

Several Conservative MPs called for Greece to quit the euro now so that it can devalue its currency, while Labour warned that the spending cuts involved in the EU deal could kill off any hope of the country returning to growth.

At a summit of EU leaders next week, Mr Cameron will call for a "big bazooka" to be fired by the European Central Bank (ECB) to prevent the problems afflicting Greece spreading to other eurozone nations. He said yesterday: "Greece has made its choice and we now have to focus on the next step, which is constructing a firewall which is large enough to prevent contagion within the eurozone... I think that's absolutely essential."

Downing Street said the EU bailout would not require any more British taxpayers' money to be channelled to the International Monetary Fund (IMF), which will supervise the Greek deal along with the ECB and the European Commission. However, Mr Osborne will discuss a longer term plan to boost the IMF's resources with fellow finance ministers from the G20 leading economies in Mexico this weekend. That could eventually see the UK contribute another £17bn to the IMF, some of which could help the eurozone countries.

Mr Osborne said yesterday the agreement with Greece was "real progress" but that the Greek people and political system now had to "deliver really difficult decisions". He added: "Hopefully we can all move on now and get the European economy growing." But Alistair Darling, his Labour predecessor as Chancellor, said he was "very sceptical" about the rescue plan, warning that Greece and other EU countries could soon be "back at the table" asking for more money.

"It had to be done but it does not get you out of the woods at all," Mr Darling said. "Even if Greece manages to do everything that has been asked of it, in eight years' time they will still have a debt of 120 per cent of their GDP. The second thing is, where are the policies that are going to get growth? If you don't get the growth, you don't get the income to get down your borrowing and therefore your debt."

Tory Eurosceptics said Labour politicians were giving a more honest assessment of Greece's prospects than the Government. Bernard Jenkin said Mr Cameron faced a dilemma: "I believe it is in our interests for the Prime Minister to advocate the orderly break-up of the euro, but of course he would be immediately fingered as the enemy number one if he did say that."

John Redwood, the former Cabinet minister, said: "I don't think Greece will hit those deficit targets. I think Greece should definitely leave [the euro]. I think Portugal should probably leave. I think they need to tidy it up, get rid of the worst cases and then defend the core."

In Brussels yesterday, the UK for the first time voted against formally signing off the EU's budget for 2010, after spending watchdogs declined to approve its accounts for the 17th year running.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
Sport
footballBrighton vs Arsenal match report
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
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

Austen Lloyd: Private Client Solicitor - Oxford

Excellent Salary : Austen Lloyd: OXFORD - REGIONAL FIRM - An excellent opportu...

Austen Lloyd: Clinical Negligence Associate / Partner - Bristol

Super Package: Austen Lloyd: BRISTOL - SENIOR CLINICAL NEGLIGENCE - An outstan...

Recruitment Genius: Sales Consultant - Solar Energy - OTE £50,000

£15000 - £50000 per annum: Recruitment Genius: Fantastic opportunities are ava...

Recruitment Genius: Compute Engineer

Negotiable: Recruitment Genius: A Compute Engineer is required to join a globa...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine