Greek bail out loan ‘pushes UK nearer EU exit’

A SENIOR Tory has warned George Osborne that he helped push the UK to the European Union exit door with his U-turn in agreeing to help bail out Greece after first pledging that no British money would be involved in the eurozone crisis.

Angela Merkel speaks prior to a bailout vote in the German parliament yesterday. Picture: Getty

The shot across the bows from Tory MEP David Campbell Bannerman came as the Chancellor defended an £850 million loan from the UK to Greece as part of the bailout fund.

And it is understood that he is also facing “deep disquiet” from eurosceptics on the Tory backbenches.

Mr Osborne has claimed there is “an impregnable ringfence around it” but the money has been loaned despite a promise not to get involved in the bailout. However, it less than the £1 billion demanded by the European Commission and eurozone heads of government.

The money is part of a £5 billion bridging loan to Greece to help keep its banks open and entails the Athens government introducing draconian reforms to get the country’s finances back in order.

The International Monetary Fund (IMF) has already severely criticised the deal and warned that eventually EU countries will have to consider debt relief for the beleaguered Greeks.

But Mr Osborne had barely completed his U-turn before critics voiced anger over committing the UK to helping resolve the eurozone crisis.

Mr Campbell Bannerman, a leading eurosceptic, warned that the move would hasten a so called Brexit (British exit from the EU). He said: “Does EU actually want Brexit? This crass call for UK to pay £1 billion to Greece in breach of the PM’s agreement implies it does.”

Meanwhile, Ukip moved to capitalise on Mr Osborne’s concession.

Former Tory MP Mark Reckless, who defected to Nigel Farage’s party, said: “Why are we lending a billion to Greece to give to the IMF and ECB? Did David Cameron lie to us from May 2011 or do European leaders lie to him?”

However, Mr Osborne insisted that Britain has secured a legally binding agreement that no UK taxpayers’ money will be put at risk by an emergency seven billion euro (£5 billion) loan being offered to Greece.

Mr Osborne hailed the agreement as a “significant victory” for Britain, which had strengthened the protection against the UK being caught up in any future bailouts of eurozone countries.

He said an “impregnable ring-fence” had been created to ensure British funds – and those of other non-eurozone states – are not put at risk.

“I said British taxpayers’ money would not be on the line in any agreement and that’s precisely what we have achieved,” said the Chancellor.

“We have today secured a significant victory and strengthened the protections for the UK in the latest Greek bailout and any future bailouts of eurozone countries.

“I made clear to my European counterparts that this was an absolute red line for Britain. While we have sought to be constructive and want to see a stable solution to the Greek crisis, it could not have been right for Britain to have allowed its taxpayers’ money to be on the line in what is an issue for the eurozone itself to resolve.

“These have been tough talks, but the agreement announced this evening means an impregnable ringfence around British taxpayers’ money, which will not be at risk in any way in this emergency financing for Greece.

“Importantly, we have also managed to secure the same protections for all other member states who are not members of the single currency. The European Commission has agreed these changes will be legally binding.”