Cameron fights losing battle on EU bailout fund
Britain will fight to win guarantees that that an EU bailout fund designed for natural disasters will not be used to prop up the eurozone today.
The prime minister is pushing for EU leaders to develop a legally binding agreement that Article 122 of the Lisbon Treaty – which was used to bail out struggling Ireland – will not be resorted to as a method of rescuing the eurozone after 2013, when the new long-term rescue fund for the single currency will come into force.
Analysts do not expect the British effort to succeed, however.
The article allows the use of money siphoned from the EU budget to bail out countries in “exceptional circumstances beyond their control”, specifically mentioning natural disasters.
But other European leaders are keen to keep the possibility of using the article for future economic crises. This could see the UK contributing large sums to save stricken eurozone economies, unlike for the permanent fund to be set up in 2013.
The new fund being discussed today will kick in 2013, with a view to being operational until 2020, and totals over £100 billion.
Mr Cameron’s basis for quelling domestic opposition to the permanent fund, which will require a treaty change, was that it would be solely the responsibility of other eurozone countries rather than the EU budget as a whole – and therefore would not require a referendum in Britain.
The UK contributed £2.4 billion through the EU to the Irish bailout.
Concerns over the stability of the single currency continue to rise, meanwhile. The Portuguese economy is having its credit-worthiness questioned even after the events in Ireland, while Europe’s fifth-largest economy, Spain, is experiencing huge levels of debt.
The issue of Europe, never far from Conservative MPs’ hearts, is continuing to cause ructions on the Tory backbenches – as criticism mounts over the alleged impotence of the prime minister to determine the EU’s agenda.
