Let Greece go bust, urges Johnson

Boris Johnson says joining the euro made Greece’s problems worse

Britain should not be expected to contribute to a second bail-out of the Greek economy, Boris Johnson has said.

Speaking to the Daily Telegraph, the Conservative mayor of London said Greece should be allowed to default on its debts and leave the euro.

Eurozone finance ministers have agreed to a second bail-out to keep the country afloat.

But they have postponed a £10bn EU/IMF loan until further austerity measures are introduced.

The Greek government expects a second rescue package to be similar in size to the first one just over a year ago.

But the UK government is under pressure from its own Conservative MPs – and leading figures such as Mr Johnson – to let Greece go its own way.

“For years, European governments have been saying that it would be insane and inconceivable for a country to leave the euro,” writes Mr Johnson.

“But this second option is now all but inevitable, and the sooner it happens the better.”

“If you want 100,000 Greeks pitching up here looking for jobs that is exactly the kind of silly language you would use”

Denis MacShane Former Europe minister

He suggested that Greece’s actions in running up unmanageable debts had been encouraged by its membership of the euro.

“The euro has exacerbated the financial crisis by encouraging some countries to behave as recklessly as the banks themselves,” he said.

“We are supposedly engaging in this bail-out system to protect the banks, including our own. But as long as there is the fear of default, as long as the uncertainty continues, confidence will not return across the whole of Europe.”

Britain did not pay anything towards the first Greek bail-out and UK ministers insist they do not expect to be asked to contribute to a second rescue package by the eurozone countries.

But Britain does contribute to the International Monetary Fund – which is also involved in Greek rescue efforts – through which it has loaned £1.9bn.

The UK last week almost doubled its annual subscription to the IMF – from £10bn to £19bn – but the Treasury insisted the deal was agreed before the debt crises in Greece, Ireland and Portugal.

Greek bail-out timelineMay 2010: EU and IMF agree bail-out package to prevent Greece defaulting on its debts; in return, Greece agrees to make 30bn euros of budget cuts over the next three yearsFebruary 2011: EU and IMF experts tell Greece it must make further cuts to keep recovery on trackApril 2011: EU figures reveal Greek deficit revised up to 10.5% of GDP, worse than previously thoughtMay 2011: Greece begins privatisation programme but is warned the IMF may not release more funds as Athens cannot guarantee it will remain solvent for next 12 monthsEurozone delays Greece decision Q&A: Greek debt crisis Viewpoint: Politics of Greek crisis

UK Independence Party leader Nigel Farage warned against contributing further towards a fresh Greek bail-out.

“The UK is a contributor to the IMF, so already UK money is being used indirectly to bail out Greece,” he said.

“In terms of throwing more money at the problem, how can the government expect British taxpayers to put up with that when at home they are enduring pay freezes or job losses?

“A fresh bailout for Greece should not involve the UK. Repeated transfusions will not resuscitate a corpse and the euro is dead.”

Former Labour Europe Minister Denis MacShane conceded that Greece should “probably not” have joined the euro in the first place.

But he argued it was in Britain’s self-interest to help prevent it defaulting on its debts and leaving the single currency.

And he attacked Boris Johnson’s call for Greece to be allowed to go bankrupt as “frivolous, flippant and irresponsible”.

“For a nation to go bankrupt would condemn its people to a long period of distress and misery, which would only create further immigration flows as Greek workers are forced to get on their bikes and seek employment elsewhere.”

He said Mr Johnson’s words – on the front page of a newspaper for which he writes regular opinion pieces – were more suited to a “gimcrack right wing columnist” than “the elected leader of a major city”.

“If you want 100,000 Greeks pitching up here looking for jobs that is exactly the kind of silly language you would use,” he added.

And he suggested it was Britain’s duty to come to the aid of a fellow European nation at a time when it was sending more in foreign aid to India and paying for military operations in Libya.

“If your neighbour’s house is on fire, you don’t refuse to lend it a hosepipe,” he added.