UK FACES £1bn BAILOUT BILL

We could be forced to join Greece rescue despite promise only eurozone would pay

CHANCELLOR George Osborne will today attempt to fight off a European bid to force the British public to contribute almost £ 1billion towards any bailout of Greece.

Sources close to Jean-Claude Juncker, the arch- federalist European Commission president, say he wants the UK to release the funds as part of emergency loans to the country.

But this would break an agreement made by David Cameron in 2010 that Britain would not have to pay, because it is not a member of the eurozone. Commission officials say this deal was nothing more than a ‘political’ accord with no legal force.

It came as Greece’s Left-wing leaders were forced into a humiliating climbdown yesterday as the eurozone cobbled together a lastminute deal to avoid the country’s expulsion from the single currency.

Alexis Tsipras was said to have been ‘crucified’ by European leaders in marathon late-night talks in which he was forced to accept severe austerity measures and hand even more control to creditors as the price of remaining in the euro.

There was anger in Greece at the capitulation. Last night demonstrators burned the flag of his party, Syriza, on the streets of Athens.

Now Mr Tsipras faces the difficult prospect of getting the deal through his parliament. Creditors have said they will only agree to release further funds to help the near-bankrupt economy if the reforms are agreed by MPs by tomorrow night.

Prime Minister David Cameron and Mr Osborne welcomed the deal, but warned the risk to the UK economy remained unless a lasting solution is hammered out.

The Chancellor will attend a meeting of European finance ministers today, at which he will argue that any demands for the UK to pay as much as £850million are a ‘non-starter’.

Jeroen Dijsselbloem, the Dutch chief of the Eurogroup, confirmed yesterday a bailout ‘involving all member states’ will be considered. Britain has no veto, with approval instead requiring the consent of 85 per cent of states, weighted for population – presenting the risk that the UK could be out-voted.

In telephone calls with European finance ministers last night, Mr Osborne said the 2010 deal must stand. A Treasury source said: ‘Our Eurozone colleagues have received the message loud and clear that it would not be acceptable for this issue of British support for Eurozone bailouts to be revisited.

‘The idea British taxpayers’ money is going to be on the line in this latest Greek deal is a non-starter.’

Under Mr Juncker’s plan, the Commission will use the EU budget as collateral against 8.6billion euros of short-term bridging loans to Greece – opening the prospect that the UK will need to pay out. Greece has been told to find 12billion euros to service its debts by the end of next month, or suffer a banking collapse. This includes 4.2billion euros to repay the European Central Bank on Monday.

To cover this, Mr Juncker wants to revive the European Financial Stabilisation Mechanism (EFSM), a loans facility used to rescue Ireland and Portugal. It works by borrowing money on the international markets, using the EU’s own budget as collateral, and can release billions with the nod of EU finance ministers.

Britain pays around 14 per cent of the EU budget – meaning lending Greece 8.6billion euros would leave UK taxpayers exposed to the tune of around £850million. The risk of default is high. Mr Cameron secured a binding agreement with his counterparts in Brussels in 2010, explicitly prohibiting such a deal.

Last night think-tank Open Europe said: ‘There is no good reason why the UK should participate. This is entirely a problem of the eurozone and Greece’s own making.’

Banks remained shut in Greece yesterday, with the European Central Bank vowing not to release any cash until austerity reforms are approved.

Mr Tspiras’ agreement has alienated so many of his left-wing Syriza MPs and their allies that he looks set to have to rely on the votes of pro-austerity opposition parties to get the deal through.

Following all-night talks in Brussels with the leaders of the 19nation eurozone bloc, the embattled leader claimed he had managed to fend off the ‘most extreme measures’ demanded by creditors. One Eurozone official said: ‘They crucified Tsipras in there. Crucified.’

Mr Tsipras may pay a high price for the deal. His party was swept to power on an anti-austerity platform. But he appears to have calculated that with most Greeks determined to remain in the euro he had little choice but to accept the terms.

Ukip leader Nigel Farage called on the Greek parliament to vote down a deal which had been rejected by the Greek people. ‘This conditional deal shows that national democracy and membership of the eurozone are incompatible,’ he said.

‘No reason why UK should participate’