UK Refuses To Give To IMF's EU Bailout Fund

Chancellor George Osborne has refused to contribute to the IMF's bailout fund for the EU, Sky News has learned.

Mr Osborne told his EU colleagues he will not provide any cash to boost the 200bn euro fund, which is specifically aimed at the troubled eurozone.

The conference call with 26 other EU finance ministers lasted three hours but ended without Britain's agreement to put in up to 50bn euros.

Mr Osborne insisted that while Britain was ready to take part in global efforts to bolster the IMF's coffers, it would not participate in a fund only aimed at the beleaguered eurozone region.

Sky's economics editor Ed Conway said: "Although we had known for a while that George Osborne had been reluctant to give money specifically for this eurozone bailout package, the fact he has gone ahead and done it will come as another blow to what was supposed to be the plan to save the euro."

He added: "It leaves us going into the Christmas season with no conclusive and no big bazooka that had been promised for so long. There will be consternation, I think, among investors at this news."

Sweden, Denmark, Poland and the Czech Republic joined the eurozone nations in contributing to the Washington-based fund, subject to parliamentary approval.

A Treasury spokesman said: "The UK has always been willing to consider further resources for the IMF but for its global role and as part of a global agreement."

Paul Donovan, Global Economist, Managing Director UBS Investment Bank told Sky's Jeff Randall: "It's not just the UK that’s not playing ball.

"The American's are saying the IMF is not bailing out California, so why should it start bailing out eurozone provinces."

Dan Morris, vice president and global strategist, JPMorgan Asset Management questioned whether the IMF fund could be successful.

"The fundamental change that needs to take place is at the country level," he said.

"What is going on in Greece, Spain and Italy in terms of the austerity and reform packages is really the key thing for the markets right now."

Mr Osborne's move comes days after David Cameron became the first British prime minister to use his veto by refusing to agree a new EU treaty aimed at easing the eurozone crisis.

The German foreign minister Guido Westerwelle pledged on Monday to "build bridges" with Britain, insisting it was an "indispensable partner" in the EU.

At a joint press conference in London with Foreign Secretary William Hague, Mr Westerwelle said the union had to remain "united".

"For Germany the United Kingdom is an indispensable partner in the European Union," he said. "We think we have a common destiny...

"No country - not Germany, not Great Britain, not France - no country is strong and big enough to face the challenges of globalisation alone."

Mr Cameron has faced accusations that he risks making the UK isolated from the rest of Europe and unable to make decisions about the future of world finance.

But the Prime Minister has insisted he had to take the drastic step because the treaty being discussed did not "adequately protect Britain's interests".

Using the veto has put the Tories ahead of Labour in recent opinion polls and bolstered Mr Cameron's standing in his own party but it has angered his Lib Dem coalition partners.


Sky News