BRUSSELS: The European commission has defied George Osborne, the UK chancellor, by formally proposing an emergency loan for Greece through an EU-wide bailout fund using up to £850m of British contributions.
The proposed use of the European Financial Stability Mechanism fund is a blow to the UK, because David Cameron thought he had secured in 2010 a “black and white” British opt-out from participating in any further bailouts for eurozone countries.
In the 2015 Conservative manifesto, the prime minister claimed: “We took Britain out of eurozone bailouts – the first ever return of powers from Brussels.”
However, with Greece needing an emergency cash lifeline of €7bn by Monday, the European commission has concluded this is the best way of avoiding a catastrophic banking collapse in the country.
Germany has expressed scepticism about reviving the EFSM, as have countries such as Denmark and the Czech Republic.
But the commission formally proposed using the EFSM on Wednesday “in the absence of a better solution” and a decision will now be made by the council of finance ministers.
Valdis Dombrovkis, the euro commissioner, said it was “not an easy solution” and the group would have to “work to address concerns of non-euro members” so that they have enough guarantees against any negative financial consequences.
