Labour could quit over vote on new bailout

The terms of a second troika bailout must be approved by Labour’s grassroots activists before the Government signs up to it, party chairman Colm Keaveney said.

Such a move would create tension within the Coalition — and could trigger a Labour exit from the Government — but Mr Keaveney warned his party would need a democratic mandate to push through a second austerity deal.

One senior Labour source said a ballot of the party’s 8,000 members on the issue would come down to an “in-out” decision on remaining in Government.