Euro crisis may spread across globe, ECB warns
Draghi warns of new year contagion
• ECB chief signals danger from huge volume of debt to be rolled over in first quarter
• Latest IMF bailout fund falls €50bn short of target after UK refuses to contribute
David Gow and Patrick Wintour
Monday 19 December 2011
The eurozone debt crisis is set to spread and deepen next year, senior central bankers warned on Monday as Britain refused to contribute to the latest International Monetary Fund (IMF) bailout fund for distressed states.
A proposal to lend €200bn (£168bn) to the IMF to enable it to bail out countries in trouble floundered after George Osborne told his fellow European finance ministers that Britain would not contribute its £25bn share.
The chancellor’s refusal, which had been widely expected, came as the European Central Bank warned that contagion from the debt crisis could afflict other eurozone countries and even spread across the globe. The central bank’s financial stability review said tensions had now reached the “systemic crisis proportions” seen at the time of the Lehman Brothers collapse in 2008 – partly because of the failure of politicians to act in time.
Mario Draghi, the ECB president, told MEPs in Brussels that pressure in bond markets in the first quarter would be “really very, very significant, if not unprecedented” as hundreds of billions in debt came up for renewal.