Greece faces ECB deadline as EU engineers bridge fund

After the Ecofin finance ministers’ meeting, Valdis Dombrovskis, the European commissioner in charge of the euro, confirmed that a loan to Greece from the EFSM was still being considered.

It will take about four weeks for Greece to get access to its new bailout program, which was agreed upon in a preliminary deal on Monday.

Britain pays around 14 per cent of the European Union budget, meaning that lending Greece 8.6billion euros would leave United Kingdom taxpayers exposed to a risk of around £850million.

Finnish Finance Minister Alexander Stubb said a solution to Greece’s immediate financial woes is hard but possible.

But in 2010 a promise was made to the United Kingdom that the EFSM would not be used for Eurozone bailouts and would be replaced by the European Stability Mechanism, which is only funded by countries in the Eurozone.

“Britain is not in the euro, so the idea that British taxpayers will be on the line for this Greek deal is a complete non-starter”.

The BBC’s Chris Mason said: “Downing Street points to the conclusions of a European Summit in late 2010 which spelt out that propping up countries in the eurozone was the responsibility of fellow users of the euro”.

European governments clashed over options to help Greece meet its short-term cash needs while it waits for a eurozone bailout deal to be finalised, officials said on Tuesday.

“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”, a source in Britain’s Treasury said.

(AP Photo/Petros Karadjias). Greek Defense Minister Panos Kammenos, who heads the government’s junior coalition member Independent Greeks, leaves Maximos Mansion after after his meeting with the Greek Prime Minister Alexis Tsipras in Athens, Monday, Ju…

The Athens parliament must pass a raft of austerity measures by tonight – including Value-Added Tax rises and pensions reforms – in order to secure the deal worth up to €86billion. Greece’s powerful and militant civil service union has also called a public sector strike for today.

“This has never been on the table”, the Prime Minister’s spokeswoman said.

The row came as Governor of the Bank of England warned that it will take “Herculean efforts” for the Greek bailout to work.

A leaked confidential study by the worldwide Monetary Fund said: “The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date – and what has been proposed”.

Italy’s public debt has risen to a new record of 2.2 trillion euros ($2.4 trillion), up by 23.4 billion euros in May.

Mr Carney said the crisis “underscores the series of institutional shortcomings that still exist” in the eurozone.

Bank of England deputy governor Sir Jon Cunliffe told MPs the “political will to hold the euro together has been tested over the last few weeks”.