Smack in the midst of an election that will likely cost Prime Minister Gordan Brown his job, British taxpayers ordered to bail out euro.
All 27 EU finance ministers have been summoned to Brussels on Sunday to sign up to a “European stabilisation mechanism. Britain will be unable to veto this as it will be put through under the “qualified majority voting” system.
The deal, effectively to shore up the euro, was denounced as a “stitch-up” last night after it emerged Nicolas Sarkozy, the French President and Angela Merkel, the German Chancellor, had devised it behind closed doors and were attempting to push it through at a time when there is no clear government in Britain.
“When the markets reopen Monday we will have in place a mechanism to defend the euro,” said President Sarkozy yesterday. “This is a full-scale mobilisation.”
Euro-zone leaders are attempting to get round objections from countries such as Britain by invoking Article 122 of the Lisbon Treaty, intended to enable a collective response to natural disasters. This does not need unanimous agreement.
By doing so, Mr Sarkozy has ensured a speedy confrontation with a new British prime minister and other leaders of non-euro currency countries. All 27 EU finance ministers must be present, but because decision will be taken by qualified majority vote, the 16 euro zone leaders can ensure its passage.
British exposure to liabilities created by a bail-out under the scheme would amount to around 10 per cent of the total loan. If a country failed to repay, the cost to Britain would be ¤10 billion (£8.6 billion) for every ¤100 billion on which it defaulted.
The scheme will present an immediate dilemma for an incoming Conservative government. A bail-out would increase British liabilities and debt at a time when Mr Cameron would be seeking to restrain spending.
Refusal to lend the money would plunge a Tory prime minister, overseeing a coalition or minority government, into a damaging conflict with the EU.
British officials are concerned that the EU is preparing to use the sweeping Lisbon Treaty clause as the legal basis for a European bailout scheme.
Under the clause, an EU member state hit by “natural disasters or exceptional occurrences beyond its control” can receive “financial assistance” after a qualified majority vote by European leaders.
Supporters of the plan argue that “exceptional circumstances” includes market “attacks” on the euro.
”The euro’s 16 countries have already agreed it – that’s a majority,” said a diplomat. “It’s a fait accompli. Those not in the euro – Britain, Poland, Sweden and other new EU members – can’t stop this.”
Mats Persson, the director of Open Europe, said that while euro zone stability was in Britain’s interests, the bailout deal was not.
”This latest move could make British taxpayers liable for the debts of governments over which they have no democratic control – to the tune of billions of pounds,” he said.
”A British government, of whatever persuasion, must really consider whether it should take part in centralised EU borrowing on this scale, not least since such facilities were always considered illegal under the EU treaties and wholly undemocratic.”
Conservatives Fall 20 Seats Short in Final U.K. Election Result
On the UK political front, Conservatives Fall 20 Seats Short in Final U.K. Election Result
The U.K.’s Conservative Party fell 20 seats short of winning a majority in Parliament in yesterday’s general election, final results showed.
David Cameron’s Conservatives won 306 districts, a net gain of 97 lawmakers from the previous election in 2005. Prime Minister Gordon Brown’s Labour Party had a net loss of 91 seats to end up with 258. The Liberal Democrats lost five seats and now have 57 members of the 650-seat House of Commons.
Good Riddance to “Clown” Brown
This result does not give anyone a clear victory. Gordon Brown can hang on if he wins a coalition with the Liberal Democrats.
I am stepping quite a bit outside my area of expertise here, but it seems to me that Brown’s Labour Party was totally trounced in the election and the Liberal Democrats did not capitalize one bit.
Moreover, Brown has made enough enemies in parliament that he has virtually no chance of forming a lasting coalition to stay in office.
If this analysis is correct, good riddance to “Clown” Brown. Now, if we can only have similar results in the US mid-term elections, throwing out the clowns that do nothing but kiss Obama’s ass, the world will be better off.
Politics aside, I fail to see how bailing out Greece when the UK has enough problems of its own, is a good idea.
Mike “Mish” Shedlock
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