Britain preparing emergency plans for eurozone collapse

Britain is in the process of developing emergency plans for the collapse of the 'creaking' Eurozone as warnings of a debt-stricken Italy needing £500 billion bailout involving billions of pounds of UK taxpayers' money are getting increasingly louder.

According to chancellor George Osborne, 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, which has Britain as a major shareholder, would have to perforce offer Italy a €600-billion rescue package to give its unelected new prime minister Mario Monti 12 to 18 months' breathing room to implement extensive tax and spending reforms.

Meanwhile, German chancellor Angela Merkel and French president Nicolas Sarkozy are said to be pushing a new pact on economic union without taking Britain or other countries outside of the EU in confidence.

They seem to be firmly against giving Britain the chance of insisting that powers be handed back from Brussels by negotiating a major new EU treaty.

Originally, Germany had planned to try to secure agreement among all 27 EU countries for a limited change to the Lisbon Treaty by the end of 2012, to allow a much tighter regime of budget controls over the 17-member Eurozone.