Concern over exposure to EU indebtedness
The UK’s exposure to EU indebtedness through the euro bank bail-out fund is running to more than €50bn, according to Bob Lyddon, general secretary of the IBOS International Banking Association.
He said: “Our membership of the EU exposes Great Britain to a maximum possible loss of €94bn. In fact, the UK would be on the hook legally for the whole planned bank bail-out fund of €50bn as well as the existing euro bail-out of €44bn, because the guaranteed liability of member states for these funds is joint and several, not just the 12.5%, which has been reported already.
“The UK’s €44bn support for the bail-out was furnished through the European Financial Stabilisation Mechanism which had been sold to the British public as a three-year bridging loan, in other words, only outstanding until longer-term and more stable facilities could be put into place, meaning the European Stability Mechanism. Instead, the EFSM runs until 2032 and is not being refinanced from the ESM. Therefore, EFSM will continue in parallel with the ESM and the European Financial Stability Facility.
“The British public has been told all along that the support for the eurozone bail-out was small and temporary, although neither is a true description, as it has been €44bn for the past 33 years. The public was told that the UK government was in control of the extent of the UK’s support for the eurozone bail-out, but this is not true. The EFSM went through on qualified majority voting. The EU regulation to enact the EFSM provided for no member state controls, nor did it control the length of time for which the EFSM can be in place.
“Other member states are now looking to see if they can mobilise the EU’s balance of payments facility in the same way as the EFSM, to provide funds into the euro bail-out apparat of up to €50bn, without any limitation on the drawdown period, for as long a period as the market will swallow the bonds, without any member state controls and with recourse to all non-euro member states as well as those of the eurozone.”