UK refuses EU pleas to help in Greek bail-out

GEORGE Osborne last night rejected a plea from the president of the European Commission, who urged the UK to contribute to the Greek bail-out despite being outside the eurozone.

Jose Manuel Barroso, president of the EU’s executive, claimed that all 27 European countries had a stake in the Greek rescue, because a tumbling eurozone would “bring all countries in difficulties”.

In an interview with the German tabloid Bild, Mr Barroso was quoted as saying he recognised that “London has no obligation to help Greece”, but he added that he “would wish that all countries that are financially able to do so show support”.

His remarks were clearly directed at the UK, which is Europe’s biggest economy outside the 17-nation eurozone.

However, Mr Barroso’s comments received short shrift from the Treasury last night, when a spokesman said: “The PM has been clear and agreed with other European leaders that the UK will not play a part in further European financial assistance to Greece.”

The commission president’s plea fell on deaf ears despite Britain lending Ireland £3.25 billion last year in a bi- lateral loan as part of a £7bn contribution to an international bailout following the near collapse of the Irish banking system.

However, at the time of the loan to Ireland, the Treasury made it clear that the action was taken because it was in the national interest, and because of the strong connections between the UK and the Irish republic.

Mr Barroso’s words came to light as international financial inspectors claimed they had reached agreement with Greece on reforms to put the nation’s troubled economy back on track.

“Economic and financial policies” have been agreed between Greece and the troika of bodies which has been consider whether Athens should get any fresh loans.

The EU, the International Monetary Fund (IMF) and the European Central Bank say Greece is now likely to get €8bn (£7bn) more bail-out cash.

This came as they said Greece’s fiscal target for 2011 was not achievable.

“Once the Eurogroup and the IMF’s executive board have approved the conclusions of the fifth review, the next tranche of €8bn will become available, most likely, in early November,” a statement said.

Some €5.8bn would come from the eurozone member states, and another €2.2bn from the IMF.

“The success of the programme continues to depend on mobilising adequate financing from private sector involvement [PSI] and the official sector, “ the troika’s statement continued.

“Ongoing discussions on PSI together with assurances provided by European leaders at their 21 July summit suggest that the programme remains fully financed,” it said.

The statement said that “the fiscal target for 2011 is no longer within reach, partly because of a further drop in GDP, but also because of slippages in the implementation of some of the agreed measures”.

However, it added that that 2012’s deficit target of €14.9bn should be met if there was a “determined implementation” of the government’s austerity plan.

The inspectors said they believed that Athens was committed to its privatisation plan, under which ministers hope to raise €35bn by the end of 2014.

The three organisations said the key to achieving that goal was to ensure that the privatisation fund, which supervises the sell-offs, remains independent.

Meanwhile, the rest of Europe was watching Slovakia last night as politicians in the eastern European country took part in a vote that could determine the future of Europe’s common currency.

The vote was a by-product of eurozone rules requiring unanimous support for every major decision.

EU officials could get around a potential Slovakian rejection of the bill to boost the powers and size of a euro bail-out fund, designed to contain debt market turmoil, but doing so would carry costs to European unity.

Slovakia’s prime minister, Iveta Radicova, urged politicians to back the bill, arguing that the country was losing its credibility – the country’s 16 partners in the eurozone have already backed the package of measures designed to boost Europe’s firefighting capabilities.

“It is the entire eurozone system which is under threat at the moment, not just a few small countries anymore,” Ms Radicova said in the debate in parliament. “Our euro is under threat. The changing situation needs a quick and immediate reaction.”