Cameron comes out fighting on £19bn eurozone bailout plan

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The Independent Online

David Cameron claimed victory last night as he tried to prevent Britain facing a bill of up to £19bn to bail out debt-ridden countries in the eurozone.

At a two-day summit of European Union leaders in Brussels, the Prime Minister demanded that after 2013, there should be no more emergency payments to countries afflicted by an economic crisis from an EU fund originally intended for natural disasters. The fund guaranteed loans to Ireland last month and the previous Labour government signed up to British participation in it until 2013. Although the Chancellor George Osborne has said Britain will not take part in any bailouts after 2013, EU officials rebuffed the Government's demand for such an assurance. When the summit began, Mr Cameron tried to persuade other EU leaders to overrule the officials and won the backing of France, Germany, Spain, Portugal and Sweden.

Later British officials claimed that the summit conclusions to be issued today would make clear that the disasters fund "need not and should not be used for financial bailouts" after 2013. They were confident that the leaders' agreement would be binding on the EU. A Downing Street spokesman said: "We have the belt and braces the Prime Minister was seeking."

However, some EU diplomats cast doubt on whether the statement would be legally binding. One EU source said: "It is not a question of victory for Britain. There was one major concern expressed by one member state and everyone understood that it had to be accommodated. When something like this happens in the EU, everyone tries to find a compromise."

Today Mr Cameron will lead calls for a tight cap on EU spending in the period 2014-20, on which negotiations start next year. At the summit last night, he was seeking the support of other EU leaders for a letter proposing that the EU budget should rise by no more than inflation over the seven-year period.

Officials said he had won backing from France and Germany as well as the Netherlands, Sweden, Finland, the Czech Republic, Estonia and Austria. But poorer member states, led by Poland, who benefit most from EU membership were furious at what they saw as a "stitch-up" by Britain, France and Germany. Mr Cameron's manoeuvres also angered the European Commission, which wants to take the lead in the budget talks.

A draft of the British letter said: "European public spending cannot be exempt from the considerable efforts made by the member states to bring their public spending under control. Payment appropriations should increase, at most, by no more than inflation over the next financial perspective."

Mr Cameron said the disasters fund should revert to its original remit. He argued that it would not be needed because the summit will today set up a permanent rescue mechanism for the 16 countries in the eurozone from 2013, to which Britain will not have to contribute.

Angela Merkel, the German Chancellor and driving force behind the new bailout mechanism, said the changes required to the EU's Treaty of Lisbon would be "very limited". That will help Mr Cameron to head off demands by Eurosceptic Tory MPs for a referendum in Britain.

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