France to support keeping UK out of new Greek rescue

CHANCELLOR George Osborne is counting on the support of France to avoid underwriting a second Greek bailout as he flies to Brussels for a summit of EU finance ministers today.

French finance minister Christine Lagarde has said that any second rescue for Athens is likely to involve extending the terms of the first – which didn’t include a UK contribution. “Last time this bailout package was on a bilateral basis, where each member of the Eurozone… went to bilateral arrangements,” she said. “The consideration at the moment is to extend those, if it was necessary, and clearly the UK was not party to those.”

The position of Germany, the Eurozone’s main paymaster, is not yet known, but France’s support for a bailout that does not draw on the European Financial Stability Mechanism (EFSM), which the UK underwrites to the tune of 13.5 per cent, is a boost for Osborne, who has said he wants to keep the Treasury out of any new rescue for Athens.

EU finance ministers will also today sign the main text establishing a new permanent bailout fund from 2013, but it is understood that the document will not include a firm decision on haircuts for private investors.