Another European mess for the coalition to deal with

Financial meltdown. As Ben Brogan says this morning, it tends to concentrate the mind. And so it is with the coalition, after days of infighting and spiteful diversion. The meltdown is not our own, of course, but that of the Greeks. And although much will be said by Conservative and Liberal Democrat politicians about how “there, but for the grace of George Osborne,” etc., the real issue for them is simply this: how much are we in for? If Greece requires another bail-out, how much British money might be involved?

Osborne himself – speaking across the news channels yesterday – has set out out a firm line. “We certainly don’t want to be part of any bail-out of Greece,” stresses the Chancellor. Although, as everyone knows, wanting something doesn’t necessarily make it so. Vince Cable, then, got closer to the truth of it, in interview with Sky: “There are the support mechanisms within the eurozone, which we don’t subscribe to. And there are agreements we have entered into as part of the IMF … and as members of the European Union, and we make a clear distinction between those two things.” In other words, we might be obliged to help anyway.

And so, again, it comes down to which rescue mechanisms are deployed. If any extra cash for Athens comes from the eurozone’s European Financial Stability Facility, then Britain is in the clear. If it comes from the IMF or the European Stability Mechanism, as in the case of Portugal’s bail-out, then we shall be stung too. There are reasons for optimism: the first Greek bail-out was kept within the eurozone, and discussions so far appear to be emphasising measures such as extending the country’s debt repayments. But, for now, the issue is up the air. It could still land with a harsh thud for British taxpayers.

And there are resounding implications for other countries too. Might Greece exit the eurozone, as is increasingly being suggested? Might Ireland use a renegotiated Greek bail-out as leverage in its own quest for less severe terms? Might the Germans finally draw a line in their public finances? Questions abound. Answers, perturbingly, less so.