Osborne promises extra cash for IMF

George Osborne will on Monday promise to help struggling eurozone countries by increasing Britain’s contributions to the International Monetary Fund, admitting that “risks faced by the global economy have increased significantly over the past year”.

Mr Osborne’s speech to business leaders in Hong Kong will be seen as an implicit call for China to also increase its backing for the IMF, alongside further contributions from Japan and other leading economies.

The chancellor is braced for a parliamentary battle to secure approval for extra British support for the IMF, but his comments at the start of an Asian tour are the most striking sign yet that he sees the issue as urgent.

“Its members also have a responsibility to ensure the IMF has the resources it needs to promote the global economic stability from which we all benefit,” Mr Osborne will say.

“The capacity of the IMF may also need to rise to ensure those risks can be addressed, but this cannot be a substitute for action by the eurozone. Britain stands ready to play its part.”

Mr Osborne is likely to commit more than the £10bn already approved by a parliamentary vote last July, but may face opposition from Tory MPs – and possibly Labour – who have argued that the eurozone is not doing enough to help itself.

Although the chancellor’s tour of Asia has been overshadowed by the economic crisis on Britain’s doorstep, Mr Osborne is trying to impress his hosts with a display of optimism that the UK is well placed to recover.

There will be a round of drumbeating for inward investment to Britain; Mr Osborne will pursue his drive to secure Chinese financial backing for schemes such as the HS2 rail line and the Atlantic Gateway development in north-west England.

But he will also try to position Britain as a gateway for Asian investment into Europe, not just in manufacturing but also in financial services.

Asian leaders may need some convincing that Britain remains a reliable European partner and that David Cameron’s use of the veto in Brussels last December does not mark the start of a slide into isolation – or even exit – from the EU.

“We can in Britain build on our position as the home of Asian investment and Asian finance in Europe,” he will say. “We want Britain to become one of the easiest places to invest, to raise capital, to start a business, to expand and to export from.”

The chancellor will also position Britain as an ally in Europe for Asian exporters, promising to resist protectionism. Recognising that global trade talks are at an impasse, he will say Britain would look at “ambitious free trade agreements with key partners”.

Meanwhile William Hague, foreign secretary, confirmed that Britain was making contingency plans for the possible collapse of the euro, but said “that doesn’t mean we believe all these things are going to happen”.

He told Sky News that some reports about those plans “were rather exaggerated”. There has been speculation that the Foreign Office was preparing to evacuate Britons trapped abroad if euro cash machines stopped working.