Eurozone Crisis: UK May Have To Commit Billions To Bailout Through IMF
The UK could have to lend billions of pounds into the International Monetary Fund (IMF) as part of the European Union's bailout plan, despite David Cameron's decision to veto treaty change in the union.
According to the IMF's internal magazine, €150bn of the €200bn loan that EU leaders have proposed to give to the IMF to fund future bailouts will be paid by eurozone member states, with the rest contributed by non-euro countries within the union.
Typically, the bailout loans would be divided up, with each country paying an amount proportional to its GDP, relative to the other countries. The UK is by far the largest of the ten 'outs' and so would be likely to absorb the lions' share.
The €200bn loan is yet to be finalised, but it would go some way towards giving the institution the firepower to bail out Italy, should the country's liquidity crisis become a full-blown solvency crisis.
How the money would be split was not included in the final document that emerged from Friday's meeting, which was endorsed by 26 out of the 27 EU countries, with the UK the only naysayer.
Unless it specifically negotiated an opt-out, it is possible that the UK would be bound by its membership of the EU to participate in union-wide initiatives.
While, if true, the UK does have to put money into the new bailout facility, the eurosceptic argument that British membership of the EU should be put to a referendum is likely to intensify. However, while the coalition government has rejected calls to participate directly in eurozone bailout packages, it has indicated that it would not be averse to bolstering its commitment to the IMF. The Treasury has also participated in multilateral bailout packages for Ireland.