Britain draws up emergency plans for collapse of Euro after warnings Italy needs £500bn bailout

[WestVirginiaRebel]

UK Daily Mail:

Britain is drawing up emergency plans for the collapse of the ‘creaking’ Eurozone amid warnings debt-stricken Italy will need a £500 billion bailout involving billions of pounds of UK taxpayers’ money.

Chancellor George Osborne said the Treasury had ‘stepped up’ contingency planning and aimed to be ready for ‘whatever the Eurozone throws at us’.

It emerged yesterday that the International Monetary Fund, in which Britain is a major shareholder, could be forced to offer Italy a €600 billion (£514bn) rescue package to give its unelected new prime minister Mario Monti 12 to 18 months’ breathing room to implement big tax rises and spending cuts.

And in another move, German Chancellor Angela Merkel and French President Nicolas Sarkozy were revealed to be plotting a new pact on economic union without consulting Britain or other countries outside of the EU.

They are determined not to give Britain the chance of insisting on powers being handed back from Brussels by negotiating a major new EU treaty.

Germany's original plan was to try to secure agreement among all 27 EU countries for a limited change to the Lisbon Treaty by the end of 2012, making it possible to impose much tighter budget controls over the 17-member Eurozone.

Countries will be forced to submit their budgets for EU approval before they go to national parliaments, will have to sign up to strict new rules on the size of debts and deficits and will be sued for any breach in the European Court of Justice.

The Franco-German plan will effectively mean an end to national sovereignty over budgets for countries remaining in the euro.

Source said it had become clear to Mrs Merkel and Mr Sarkozy in recent weeks that it appears impossible to get all 27 EU countries on board for the plan.
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Panic mode?