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Europe

Britain will not 'provide support' to new euro safeguard fund

Text by News Wires

Latest update : 2010-05-10

Britain's Finance minister Alistair Darling said his country would not "provide support" to a European bailout fund to help potential debt-troubled eurozone countries, hours before his 27 EU counterparts meet in Brussels to vote on the measure.

AFP - Britain said on Sunday that it will refuse to underwrite a European Union bailout fund worth some 60 billion euros that finance ministers want to agree at emergency talks in Brussels.

"We wouldn't participate in a European bailout fund," a British diplomat told AFP of moves for all 27 EU member states to guarantee borrowings destined to bailout troubled economies in the crisis-hit 16-nation eurozone.

British Labour Chancellor Alistair Darling landed in Brussels shortly before the European Commission was due to finalise plans to set up a mini-European version of the International Monetary Fund to aid debt-saddled euro nations.

Talks between finance ministers of the full EU, of which Britain and eastern industrial powerhouse Poland are the main non-euro states, are due to start at 3:00 pm (1300 GMT), after eurozone leaders ordered a financial firewall to be agreed by Sunday night.

EU diplomats have told AFP that a kind of "bank" would be set up with unused funds from the bloc's budget, which would then serve as "base capital" on which to borrow 60 billion euros (more than 75 billion dollars) on the bond market.

Guarantees sought from EU member states would see the interest rates kept low, sources stressed.

The plans are intended to extend emergency provisions, that have previously allowed the EU to help non-euro members like Hungary, Latvia or Romania, to the eurozone, given treaty obstacles stemming from monetary union.

Britain, whose own debts are on a similar scale to those of Greece, and which is predicted by the commission to have the highest public deficit in the EU this year, fears a long-term impact on its taxpayers.

Darling will take Britain's decision during a vote that French diplomats have told AFP could be passed using qualified majority voting, with Treasury officials "informing" potential replacements in the London government following last week's general election.

Power-sharing negotiations resumed on Sunday between Conservative and Liberal Democrat rivals unfold back in London, with Conservative leader David Cameron expected to lead an incoming minority or coalition government.

Darling can expect pressure in return from eurozone peers over Britain's refusal in March to back new laws curbing hedge and other high-risk investment funds, mostly based in the City and which critics say cost Europe dearly during market "attacks" on Greece, Spain and Portugal.

Date created : 2010-05-09

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