Global Economy May Need Help from Taxpayers in the UK; BUT OSBORNE SAYS BRITAIN WILL ONLY PUT CASH INTO IMF

Western Mail (Cardiff, Wales), November 4, 2011 | Go to article overview

Global Economy May Need Help from Taxpayers in the UK; BUT OSBORNE SAYS BRITAIN WILL ONLY PUT CASH INTO IMF


Byline: ALED BLAKE

BRITISH taxpayers could be asked to put more cash behind efforts to shore up confidence in the global economy, amid the continuing crisis in the eurozone, it was confirmed last night.

Prime Minister David Cameron used the G20 summit in France to press for an increase in the resources available to the International Monetary Fund (IMF) to support ailing economies.

The summit opened against the backdrop of remarkable scenes in Athens, where Greek Prime Minister George Papandreou dramatically signalled he was ready to call off the referendum which is threatening to derail the eurozone bailout of his country's economy.

Updates from Greece were regularly reported to the meeting of heads of government and finance ministers of the Group of 20 leading economies in Cannes.

Some ministers were consulting their BlackBerrys during the talks to check on the latest reports from Athens, amid confusion over whether Mr Papandreou had resigned, cancelled the ballot or called for a national unity government.

In Athens, Mr Papandreou ignored widespread calls for his resignation and instead invited the opposition to join negotiations on the bailout.

He told an emergency cabinet meeting that early elections would force Greece into leaving the euro, with disastrous effects for both Greece and other European economies.

Mr Papandreou spoke to conservative opposition leader Antonis Samaras in the afternoon, his office said, before a major address to his Socialist party deputies in parliament.

Speaking to his ministers, Mr Papandreou said his proposal to hold a referendum "has at least brought many people toward a rational view" of Greece's dire economic situation.

Several Greek MPs had called for a coalition unity government to approve the bailout package without a referendum, but Mr Papandreou said stepping down would make things worse.

Chancellor George Osborne said that eurozone leaders in the G20 - including France, Germany and Italy - had shown "a real sense of urgency" about resolving the sovereign debt crisis that has plagued the single currency area for two years.

Britain was maintaining pressure on the 17 eurozone states to implement the measures in the October 26 bailout package, including a 50% write-off of Greece's debt and an increase in the eurozone's bailout fund to a massive [ETH]1 trillion (pounds 870bn).

But Mr Cameron and Mr Osborne stood firm on their insistence that Britain would not contribute directly or indirectly to a eurozone bailout fund.

Sources said it was clear that "strong political pressure" was put on Mr Papandreou to sort out the obstacles to a bailout when he met French President Nicolas Sarkozy and German Chancellor Angela Merkel for eve-of-summit crisis talks.

And US President Barack Obama said it was vital to use the G20 meeting to nail down details of the rescue plan.

"The most important aspect of our task over the next few days is to resolve the financial crisis here in Europe," said Mr Obama. He acknowledged the EU had made "some important steps towards a comprehensive solution", but added: "Here at the G20 we are going to have to flesh out more of the details about how the plan will be fully and decisively implemented."

The decision of the European Central Bank's new head Mario Draghi to boost growth by cutting eurozone interest rates from 1.5% to 1.25% was welcomed in Cannes.

But doubts remained over whether cash-rich countries such as China would be willing to contribute towards the bailout fund through a mooted special purpose vehicle.

It is thought Beijing may be happier to ramp up its backing for the general IMF resources for loans to countries that get into difficulties.

And Mr Cameron and Mr Osborne left little doubt that Britain was prepared to consider a hike in its commitment, which currently stands at about pounds 29bn - 4. …

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