On one side of the Atlantic, there’s Christine Lagarde begging for more cash for the IMF. On the other, there’s George Osborne more or less willing to hand it over on behalf of British taxpayers. This is how it’s been for months now. This is why it’s no surprise to read in today’s Telegraph that Osborne may be ‘close to agreeing’ an extra £10 billion for the fund.
There are the usual caveats, of course: the Exchequer will only stump up if various other countries do likewise, and then the money has to go into one big pot for all the world, not into special mechanisms targetted at the eurozone. But none of that will assuage Tory eurosceptics, who are already the subject of a ‘Who’s gonna join UKIP?’ parlour game in Westminster. After all, that division between countries and currencies may sound very neat in theory, but what if a large chunk of the IMF money goes towards Greece or Italy or Portugal or Spain? They’re all countries, of course. But also, to some extent, a currency rests on their stability — a currency called the euro.
And what, then, if Lagarde comes back for more? One penny over £10 billion, and Osborne will need Parliament’s permission to go ahead — which is why he’ll be keen for the PIGS to start growing themselves out of their collective fiscal mire, and soon. Except, sadly, the Chancellor’s wishes are unlikely to be fulfilled on that front. Stephanie Flanders has a useful blog-post explaining why, in the case of Spain, efforts to become more competitive may also worsen the debt problem in the short-to-medium term. There’s certainly the potential for more bailouts on top of those already swiling around Euroland.
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