Did Osborne lie to MPs over Euro / IMF bailout?
8:30 am - November 4th 2011
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This is what George Osborne told MPs last week:
Britain will not be putting money into the bail-out fund either directly or through the IMF.
The IMF exists to support countries, it does not exist to support currencies. The IMF contributing money to the eurozone bail-out fund, no; Britain contributing money to the eurozone bail-out fund, no. That is Britain’s clear position.
Well that’s very clear then.
Oh wait, it isn’t so clear now.
George Osborne is braced for a backlash from Eurosceptics in the Conservative party over plans for a multi-million pound increase in Britain’s contributions to the International Monetary Fund.
The boost in IMF funding, under discussion for more than a month, is designed to strengthen the countries which are fighting excessive debt and spiralling borrowing costs.
If this deal was in discussion for over a month – did Chancellor George Osborne lie to MPs? Someone from Labour should ask him to clarify.
Labour will vote against the bailout, rightly, because it is a substitute for direct intervention by the European Central Bank.
Only ECB intervention can stabilise this crisis once and for all. Anything else is a stop-gap measure.
Ed Balls said yesterday:
The IMF’s job is to support individual countries with solvency crises, not to solve a structural problem caused by eurozone countries being unable to agree the necessary steps to support and maintain their monetary union.
Indeed.
In the meantime, can someone please find out if Osborne lied to MPs?
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Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments
There isn’t even an inconsistency here, let alone a lie.
is designed to strengthen the countries which are fighting excessive debt
Countries, not currencies.
I cannot see the inconsistency in Osborne’s statements. However, there is a problem. When the IMF assists a country in difficulties it usually demands, in return, a combination of fiscal and monetary policy (particularly allowing some degree of currency depreciation and interest rate adjustments). The countries in the Euro cannot adopt monetary adjustments whilst remaining in the Euro. Consequently, the full weight of adjustment falls on fiscal policy. IMF money may go to assist Greece (entirely legally within the IMF mandate), but Greece can only offer more austerity in return. If the IMF had the courage of its convictions, it would demand that Greece leave the Euro in return for assistance. Osborne is correct to point out, implicitly, that the IMF mandate does not allow it to simply donate money to the ESF.
No inconsistency? What? First he said no money would go to the IMF, not it will, for a bailout fund. What’s not inconsistent?
3 – Sunny, Osborne’s first statement there is that the IMF will not be contributing to the Eurozone bailout fund – as far as I’m aware that’s still the case.
That the UK has (before and after that statement) increased its lending to the IMF has literally nothing to do with it. They are entirely unrelated points.
presumably the “bailout fund” does one thing, and the IMF does something slightly different. My guess is the IMF lends directly to sovereigns, the bailout fund does, what, recapitalise banks and buy government debt in secondary markets? I’m sure Richard W or someone will know.
Sunny, there really is no inconsistency here. The key assertion is this statement.
” The IMF contributing money to the eurozone bail-out fund, no; Britain contributing money to the eurozone bail-out fund, no. That is Britain’s clear position ”
The eurozone bail-out fund is the EFSF. There was crazy chatter that the IMF could buy bonds from the EFSF If Britain increase funding to the IMF, then they would be contributing directly to the EFSF bail-out fund with associated risks. It was always a crazy idea because the IMF lending must be senior to all other creditors.
However, the UK Increasing contributions to the IMF is expanding the IMF balance sheet and is completely different. Our Special Drawing Rights ( SDRs) increase as we contribute more. Theoretically, the SDRs are available to the UK to withdraw at anytime and are just like BoE foreign reserves. The UK contributing to the EFSF bail-out fund would be assuming risk. IMF contributions can never be non-zero risk, just massively lower risk. The coalition have taken the correct stance for the UK on this issue.
*IMF contributions can never be zero risk*
All these comments – you have to laugh, the goal posts are changing at a phenominal rate. If Greece is going to default anyway (which seems pretty much to be on the cards) why are they being ‘bailed out’ at all. Why should the Greek people be condemned to a generation of austerity at least comparable to post war Europe just to keep France and Germany happy?
Get out!
What’s the worst that can happen (famous last words) and would getting out be any worse than staying in? Just declare bankruptcy, write off your debts and get your bloody fingers out sorting out your tax system so that you can collect what is due and get back on your feet again. Is it just politics that lands us all in the mire? Sometimes it’s cruel to be kind and kind to be cruel.
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Liberal Conspiracy
Did Osborne lie to MPs over Euro / IMF bailout? http://t.co/mhZlNczU
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Pucci D
Did Osborne lie to MPs over Euro / IMF bailout? http://t.co/mhZlNczU
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sunny hundal
Did George Osborne lie to MPs over the Euro / IMF bailout? Someone should ask him http://t.co/1vxb0UbB
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Maureen Czarnecki
Did George Osborne lie to MPs over the Euro / IMF bailout? Someone should ask him http://t.co/1vxb0UbB
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Rab Devine
Did George Osborne lie to MPs over the Euro / IMF bailout? Someone should ask him http://t.co/1vxb0UbB
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Andy S
Did George Osborne lie to MPs over the Euro / IMF bailout? Someone should ask him http://t.co/1vxb0UbB
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House Of Twits
RT @sunny_hundal Did George Osborne lie to MPs over the Euro / IMF bailout? Someone should ask him http://t.co/wkkaftqy
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David Smout
Did George Osborne lie to MPs over the Euro / IMF bailout? Someone should ask him http://t.co/1vxb0UbB
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Janet Graham
Did Osborne lie to MPs over Euro / IMF bailout? http://t.co/mhZlNczU
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Mags W
Did George Osborne lie to MPs over the Euro / IMF bailout? Someone should ask him http://t.co/1vxb0UbB
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Janet Graham
Did George Osborne lie to MPs over the Euro / IMF bailout? Someone should ask him http://t.co/1vxb0UbB
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Lanie Ingram
Did George Osborne lie to MPs over the Euro / IMF bailout? Someone should ask him http://t.co/1vxb0UbB
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Jean
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Alex Braithwaite
Did Osborne lie to MPs over Euro / IMF bailout? | Liberal Conspiracy http://t.co/uTptzxn9 via @libcon
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malcolm
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Jane Brown
Did George Osborne lie to MPs over the Euro / IMF bailout? Someone should ask him http://t.co/1vxb0UbB
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