Osborne hints at further UK payments

The Chancellor insisted yesterday the UK will not contribute money directly to the EU bail-out fund despite the “very good progress” made by European leaders – but admitted money could be handed to the IMF if other countries do the same.

The coalition Government has made it repeatedly clear how important a successful eurozone is to the UK economy.

David Cameron highlighted in the Commons this week just how vital the EU is for the UK, providing more than 50 per cent of its export market. His Deputy, Nick Clegg, added: “British jobs, British prosperity, the British economy, British families, British communities are massively dependent on a successful European economy.”

But Mr Osborne has nonetheless been under huge pressure not to offer UK funds towards the EFSF bail-out fund, with the Treasury still slashing public spending as it battles to close its own gaping budget deficit.

Suggesting a compromise of sorts yesterday, he said some extra money could go to the IMF.

“Supporting countries that cannot support themselves is what the IMF exists to do, and there may well be a case for further increasing the resources of the IMF to keep pace with the size of the global economy,” he said.

But he stressed: “We are only prepared to see an increase in the resources that the IMF makes available to all countries of the world. We would not be prepared to see IMF resources reserved only for use by the eurozone.”

The wider political debate over whether governments should be spending their way out of the crisis rather than slashing investment continued with comments from Shadow Chancellor Ed Balls.

He said the world risks economic “catastrophe” if governments persist in collective austerity.