UK will not take part in new bailout mechanism

THE UK will not take part in new rescue fund for troubled Eurozone nations.

Chancellor George Osborne won an important concession from the EU in return for pledging a bi-lateral loan of €3.8bn (£3.23bn) to Ireland.

The UK will not contribute to the a new fund, due to replace the European Financial Stability Mechanism (EFSM) in 2013. It currently has a share in the €60bn fund but is not a part of the €566bn European Financial Stability Fund (EFSF), also due to be replaced.

The move means the UK will be less exposed to Eurozone crises moving forward and is likely to please Tory eurosceptics.

Germany and France have championed the proposals for the new mechanism and are supported by the European Commission.

Key changes to the fund will mean vastly increased private sector involvement in the resolution of future Eurozone debt crises. The new rules will also differentiate between liquidity and solvency crises in the 16 Eurozone countries.