Alastair Darling: 'UK wants to see stability but will not rescue euro'

ALASTAIR Darling attended emergency talks in Brussels yesterday designed to agree a new "European stabilisation mechanism" in an effort to convince world markets that the euro is a stable and credible currency.

However, with the General Election having resulted in a hung parliament, the Chancellor will need to consult his Conservative and Liberal Democrat counterparts, George Osborne and Vince Cable, before signing up to any position.

Meanwhile, the International Monetary Fund yesterday approved a 30 billion (about 26bn) rescue loan for debt-stricken Greece.

In a brief statement after a lengthy meeting, the IMF board said the loan programme covered a three-year period. It is part of a European-led 110bn financing plan for Greece to avert the eurozone's first sovereign debt default.

Mr Darling said he would oppose any new bailout plan for the single currency that exposes Britain to the risk of massive hand-outs to debt defaulters.

One plan would allow the European Commission to borrow on behalf of a member state in financial trouble, using the EU budget as collateral.

The other, more controversial, scheme would involve setting up an EU version of the International Monetary Fund, with all member states exposed to risk from national coffers if a member state defaults on loans backed by its EU partners.

Mr Darling said that while Britain wanted to see stability restored, it was up to the euro-group countries to support the single currency.

"It is clearly in our interest that everything is done in Europe to try to stabilise the situation," he said. "But I am very, very clear that if there is a proposal to create a stability fund for the euro, that has got to be a matter for the euro-group countries.

"What we (ie, the UK] will not do and what we can't do is to provide support for the euro. That has got to be for those countries that use the euro, that are members of the euro group."

The Greek bailout package is the biggest in history and comes with stringent conditions that include a combination of spending cuts and revenue increases.

Greece has a debt burden of more than 115 per cent of gross domestic product, and the EU-IMF package is intended to help Athens meet financing needs falling due on 19 May.

In Brussels yesterday, European finance ministers pressed for special measures before financial markets open today to stop Greece's debt crisis from spreading, promising to do everything they can to defend the euro from the "wolfpack" of financial markets.