Chancellor George Osborne is to refuse the UK’s part in the new €86bn Greek bailout, saying it goes against a previous agreement of EU leaders in 2010.
The funding for a bridging loan for Greece will come from the European Financial Stabilisation Mechanism, which sees contributions from all 28 member states. However, Osborne will tell a meeting of officials in Brussels that the fund cannot be used for such a loan.
An EU summit in 2010 saw an agreement that only fellow eurozone members would be involved in any bailout of Greece, with David Cameron saying any involvement by the UK now would go against this agreement and be “quite wrong”.
“The idea that British taxpayers’ money is going to be on the line in this latest Greek deal is a non-starter,” one UK Treasury insider told the FT.
Any payment by the UK in the Greek bailout is likely to fuel the fire of eurosceptics ahead of the discussion and referendum on Britain’s membership of the EU.
The latest bailout deal is already seeing resistance in Greece, with threats of strikes by workers in the country affected by the new reforms, which include cuts to pensions and reform of tax.
It is likely Greek prime minister Alex Tspiras will have to rely on opposition support to pass the deal through parliament, as he sees a backlash from his own Syriza party who termed the deal a “humiliation of Greece”.