Cameron victory on Greek bailout: EU chiefs cave in and rule out cash grab from Britain

By Tim Shipman
Updated: 03:02 EST, 24 June 2011

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David Cameron last night won a key victory to save British taxpayers from paying any extra money to bail out Greece.

After crunch talks in Brussels, the Prime Minister faced down a German bid to force the UK to pay up.

Mr Cameron read the riot act to EU leaders, arguing that it would be ‘quite wrong’ for the UK to contribute to the rescue act.

Flashpoint: The Greek government's austerity measures have been met with violent protests

EU president Herman Van Rompuy caved in late last night and agreed that the conclusions of the Brussels summit would rule out any cash grab from Britain.

The ruling means that Britain will contribute around £1billion to the bailont through the International Monetary Fund but will be spared another raid on the public purse from the EU.

Britain has already contributed £12.5billion to the bailouts of Ireland, Portugal and Greece, through both the EU and the IMF.

Last night a Downing Street source said: ‘This is the right result for the British taxpayer.’ The communique to be signed by all 27 EU leaders today will confirm that only IMF and eurozone nations will pay.

Standing up for Britain: Priti Patel (left) and Dominic Raab were among 14 new Tory MPs who publicly urged the Prime Minister to stand firm against the EU

Asked if the EU-wide European Financial Stability Mechanism would be excluded from the bailout, worth £100 billion, Mr Van Rompuy said: ‘Yes.’

It came after a fraught day in which the Germans had tried to force Britain into a corner.

Amid signs that EU nations outside the single currency might be asked to cough up, the Prime Minister’s aides had rushed to seek assurances from Germany that the UK would not be railroaded into contributing.

Standing firm: David Cameron prevented another raid on the public purse

A German official in Brussels had said the financial stability mechanism should be used to help prop up the Greek economy. The Germans had threatened to use ‘qualified majority voting’ in Brussels to ram through the plans, which would have meant Mr Cameron would have been powerless to stop them.

The Brussels-based official said it was against German law for a eurozone bailout to occur unless the EU-wide mechanism fund was used as well. ‘The German legal situation is clear,’ he said. ‘The EFSM should contribute.’ The claims sent panic through Downing Street, where officials thought Mr Cameron had a deal with German chancellor Angela Merkel to prevent Britain joining further EU bailouts.

Earlier, he had come under pressure from his backbenchers over the issue. In a letter to the Financial Times, 14 new Tory MPs said: ‘We are concerned that the solutions to the crisis proposed by the eurozone countries amount to no more than throwing good money after bad and will further expose the British taxpayer to any future economic meltdown. We must take the taxpayers’ side in resisting further bailouts.’ The MPs, who include rising stars such as Dominic Raab, Priti Patel, Charlie Elphicke and Chris Heaton-Harris, urged Mr Cameron to use the crisis to win concessions for Britain.

Last night Greece won the approval of a team of EU and IMF inspectors for its new five-year austerity plan to deal with its financial crisis after committing to an additional round of tax rises and spending cuts. The decision paves the way for Greece to receive bailout money from the EU and IMF.

But on a visit to Prague, on his way to Brussels, Mr Cameron had insisted the UK would only pay through its membership of the IMF, not through the EU.

‘We have the support for that from many other countries and also I have received assurances from other countries, including from the Germans, that this won’t be the case, and I’m sure they will stick to those assurances,’ he said.

Last night Mr Cameron told a dinner of EU leaders: ‘We’re clear that the European Financial Stability Mechanism should not be used in any way.’

Attempts by the Greek government to bring in austerity measures have led to violent protests.

On Tuesday, Greek prime minister George Papandreou won a crucial vote of confidence in the Athens parliament on the austerity measures.

But the Greek population remains fiercely opposed, with one union calling for two days of strikes when the details of the measures are put to the parliament next Tuesday.