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Eurozone rescue deal may cost UK

By James Tapsfield

George Osborne has hinted that Britain could contribute more to the IMF after a rescue package was agreed for the eurozone.

But the Chancellor sought to reassure Tory backbenchers that UK money would not be earmarked to bail out the struggling single currency area.

Markets have surged globally after hours of tense negotiation in Brussels finally produced a deal designed to cool the crisis.

Banks have agreed to take a 50% write-off on their Greek debt holdings, and the European Financial Stability Facility (EFSF) is to be leveraged to €1tn (£880bn).

Billions will also be pumped into vulnerable banks to protect them from failure.

The measures did not go as far as financial experts had been demanding over recent months.

But updating MPs on the developments, Mr Osborne said the eurozone now appeared to be on the "right road". "Our view is that last night very good progress has been made towards solving the immediate crisis, very good progress on all fronts," he said.

"But much detail remains unresolved and having put pressure on the eurozone to get this far, we have to keep up the pressure to get the details completed."

He insisted that Britain will not contribute money to the EFSF bailout fund - but did concede extra money could go to the IMF.

"Supporting countries that cannot support themselves is what the IMF exists to do and there may well be a case for further increasing the resources of the IMF."

But he stressed: "We are only prepared to see an increase in the resources that the IMF makes available to all countries of the world. We would not be prepared to see IMF resources reserved only for use by the eurozone."

Factfile

Under the terms of the Brussels deal, European banks will have to increase cash buffers designed to protect against future crises to 9% until next June. The private sector - predominantly financial institutions such as banks - has been asked to write off 50% of its Greek debt.

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