Eastern European countries gave an apocalyptic warning yesterday of hordes of unemployed workers heading west as a new Iron Curtain divides rich from poor inside Europe.

Twenty years after the fall of the Berlin Wall, Western leaders were told yesterday that five million jobs could be lost in the “new” European Union countries of the East unless radical action were taken to bail them out.

The spectacular collapse of some of the post-communist tiger economies led to demands at an EU summit in Brussels for a rescue fund of €190 billion (£170 billion) to stop social collapse in the Eastern nations spilling over into the rest of Europe.

The plea, led by Hungary, was rejected in a bad-tempered meeting of the 27 European leaders, dominated by fears that Western EU countries would rather prop up their own large industries and jobs at the expense of the East.

Instead Gordon Brown renewed his call for a huge injection of funds into the International Monetary Fund, which has already doled out large sums to Hungary and Latvia and is soon to receive a begging letter from Romania.

The Prime Minister refused, however, to say where the fresh money for the IMF would come from. As he prepared to fly off for talks with President Obama today, Mr Brown left behind an EU increasingly split between its old and new economies and lacking the unity that he hoped to present in Washington and at the G20 summit in London next month.

Ferenc Gyurcsany, the Hungarian leader, openly raised the spectre of collapse in Eastern Europe and the creation of a new Iron Curtain.

“Central Europe’s refinancing needs in 2009 could total €300 billion, 30 per cent of the region’s GDP,” he said in a paper calling for a fund of €160 billion to €190 billion to be set up by the richer EU members.

“A significant crisis in Eastern Europe would trigger political tensions and immigration pressures. With a Central and Eastern European population of 350 million, of which 100 million are in the EU, a 10 per cent increase in unemployment would lead to at least five million unemployed people within the EU.”

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