Osborne seeks to justify British £4.4bn contribution to EU fund

UK REACTION:BRITISH PRIME minister David Cameron is set to face pressure from Conservative MPs after it emerged the United Kingdom may have to contribute up to £4 billion to a European Union rescue fund for Portugal.

The decision by the Portuguese to apply for help was used by the chancellor of the exchequer George Osborne to vindicate his decision to cut £80 billion from spending over the next four years.

“I say this to people in Britain: if you hear the stories about the cuts and still wonder why our country needs to take these difficult decisions, then look at what is happening around us,” Mr Osborne told the British Chambers of Commerce.

“First Greece, then Ireland, today Portugal, all of them countries that did not convince the world they could pay their debts, two of them countries with smaller budget deficits than Britain – now all of them being bailed out, at huge costs to their populations.”

Following £7 billion in loans to Ireland last year, the British government has insisted it is bound to contribute to EU rescue plans because of one of the last decisions in office as chancellor by Labour’s Alistair Darling.

However, the treasury made it clear that it would not offer a bilateral loan to Portugal, as it did with Ireland, adding, however, that the contribution required under the EU-IMF rescue funds could cost the British taxpayer £4.4 billion.

Criticising Labour’s opposition to his spending plans, Mr Osborne said: “Today, of all days, we can see the risks that would face Britain if we were not dealing with our debts and paying off our national credit card.

“These risks are not imaginary – they are very, very real. Those in our country who deny the urgent need to deal with our deficit are playing Russian roulette with Britain’s national sovereignty. I will not do that.”

However, Labour’s shadow chancellor Ed Balls replied: “If anybody is playing Russian roulette with the British economy, it’s George Osborne, taking a huge gamble now without any idea how it’s going to turn out.

“That may be good political lines but it’s very bad economics, and it’s taking huge risks with jobs and businesses and family finances up and down the country.

“I think he’s got this very, very badly wrong and he will rue this day, with this blatant politicking,” he said.

Reflecting the opposition of many Conservative MPs, Mark Reckless MP said aid to Portugal should come only from euro zone members and not from other EU states that are not part of the euro.