European Commission will use €7bn from an EU bail-out fund for Greece, forcing George Osborne to gain concessions that Britain will not lose any money.
This morning, the European Commission announced it would be mobilising funds from the European Financial Stability Mechanism to provide €7bn in bridging loans for Greece. The move is a significant blow to the British government, which contributes to the fund through its contribution to the EU budget. Here’s our story from earlier:
The European Commission has ignored David Cameron’s objections to using British taxpayer money to keep Greece from going bankrupt over the summer.
Brussels announced today that it would press ahead with plans to use a moribund EU-wide rescue fund – the European Financial Stabilisation Mechanism – to provide a €7bn emergency loan to Greece.
The plans are set to force the Government in to an embarrassing climbdown, riding roughshod over a “black and white” agreement the Prime Minister had brokered with fellow EU leaders promising the money would never be used to rescue a eurozone economy.
Should the EFSM loan go ahead, the Treasury will be exposed to around €690m of risk in order to help Greece avoid bankruptcy until the end of July.
European Commission vice-president Valdis Dombrovskis said the EFSM represented the “the best possible avenue” to provide bridge financing for cash-strapped Greece.
“This is not an easy option, some member states have serious concerns,” admitted Mr Dombrovskis.
Chancellor George Osborne was in Brussels yesterday, and dismissed the idea as a “complete non-starter”.
“The eurozone needs to foot its own bill,” said Mr Osborne.