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7 April 2011
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The Chancellor George Osborne said that Portugal is being "bailed out at huge costs to [its] population"
Chancellor George Osborne has said Portugal's need for a financial bailout shows the government was right to prioritise cutting the UK's deficit.
Portugal could not "convince the world" it was able to pay its own debts, he said, while the UK's spending cuts plan had "near universal" support abroad.
And he accused his opponents of playing "Russian roulette" with the economy.
But shadow chancellor Ed Balls accused Mr Osborne of a "desperate piece of scaremongering".
Mr Osborne has come under pressure to spell out how much the UK will be liable to pay after Portugal became the third EU country in the past year to seek external help to sort out its debts.
'Real risks' But he did not refer to this during a speech to the British Chambers of Commerce, arguing instead that only the government's action had stopped the UK from finding itself in the same position as Portugal - as well as other bailout recipients Greece and Ireland.
While these countries had not persuaded financial markets of their economic strategy, he argued the UK's deficit cutting plan - which would see spending cut by £81bn by 2015 - was "a crucial bedrock to stability at home and commanded near universal confidence abroad".
"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," he said. "First Greece, then Ireland, today Portugal. All of them countries that did not convince the world they could pay their debts.
"Today of all days you can see the risks which would face Britain if we were not dealing with our debts. The risks are not imaginary. They are very, very real."
And he turned his fire on Labour and other critics of the government's economic strategy.
"Those in our country who deny the urgent need to deal with our deficit are playing Russian roulette with Britain's national sovereignty," he said.
'Reckless' But shadow chancellor Ed Balls hit back in an interview with Sky News, saying: "I think this is a desperate piece of scaremongering from what is an increasingly desperate chancellor who looks out of his depth.
"If anybody is playing Russian roulette with the British economy it is George Osborne taking a huge gamble now without any idea how it's going to turn out."
He accused Mr Osborne of recklessly cutting spending - at a faster rate than would have happened under Labour - and putting recovery at risk.
"He is putting at risk jobs and business growth for families. He is desperately hoping it is going to work," added Mr Balls.
He said that despite having a bigger deficit than Portugal, Britain was "so different" as it had "low national debt", low interest rates and was not a member of the euro.
In his speech to the BCC conference, Labour leader Ed Miliband briefly touched on the Portuguese crisis, insisting that Labour's plans would boost growth.
Meanwhile, Business Secretary Vince Cable has acknowledged the UK would be obliged to contribute to two funds operated by the EU and the International Monetary Fund, should they be used as the vehicle for the bailout.
'Bailout implications' Eurosceptic MPs have speculated that the cost could be as much as £4bn although Mr Cable said it was "way too early" to talk about the details.
"We are members of the IMF and the EU and there are some implications from that but obviously we need to think through what the details are," he told the BBC.
But "the main lesson" from the Portugal situation, he argued, was "do not go where these southern European countries have been in terms of public finance".
He added: "We could easily have been in the position Portugal has been but we are not fortunately as a result of the steps we have taken."
UK Independence Party leader Nigel Farage has called for an urgent statement on the bailout in the European Parliament, while the Conservative leader in Brussels and Strasbourg said the UK should boycott any moves to prop up the Portuguese economy.
"We wish the eurozone well in rescuing Portugal's economy but the UK cannot and should not play a part in the EU bailout," MEP Martin Callanan said, stressing there were sufficient funds in the eurozone fund to cover all eventualities.
"British voters will not accept that at home we are making tough but fair savings only to send money to countries that should never have been allowed to join the eurozone in the first place."
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Please turn on JavaScript. Media requires JavaScript to play.The Chancellor George Osborne said that Portugal is being "bailed out at huge costs to [its] population"
Chancellor George Osborne has said Portugal's need for a financial bailout shows the government was right to prioritise cutting the UK's deficit.
Portugal could not "convince the world" it was able to pay its own debts, he said, while the UK's spending cuts plan had "near universal" support abroad.
And he accused his opponents of playing "Russian roulette" with the economy.
But shadow chancellor Ed Balls accused Mr Osborne of a "desperate piece of scaremongering".
Mr Osborne has come under pressure to spell out how much the UK will be liable to pay after Portugal became the third EU country in the past year to seek external help to sort out its debts.
'Real risks' But he did not refer to this during a speech to the British Chambers of Commerce, arguing instead that only the government's action had stopped the UK from finding itself in the same position as Portugal - as well as other bailout recipients Greece and Ireland.
While these countries had not persuaded financial markets of their economic strategy, he argued the UK's deficit cutting plan - which would see spending cut by £81bn by 2015 - was "a crucial bedrock to stability at home and commanded near universal confidence abroad".
"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," he said. "First Greece, then Ireland, today Portugal. All of them countries that did not convince the world they could pay their debts.
"Today of all days you can see the risks which would face Britain if we were not dealing with our debts. The risks are not imaginary. They are very, very real."
And he turned his fire on Labour and other critics of the government's economic strategy.
"Those in our country who deny the urgent need to deal with our deficit are playing Russian roulette with Britain's national sovereignty," he said.
'Reckless' But shadow chancellor Ed Balls hit back in an interview with Sky News, saying: "I think this is a desperate piece of scaremongering from what is an increasingly desperate chancellor who looks out of his depth.
"If anybody is playing Russian roulette with the British economy it is George Osborne taking a huge gamble now without any idea how it's going to turn out."
He accused Mr Osborne of recklessly cutting spending - at a faster rate than would have happened under Labour - and putting recovery at risk.
"He is putting at risk jobs and business growth for families. He is desperately hoping it is going to work," added Mr Balls.
He said that despite having a bigger deficit than Portugal, Britain was "so different" as it had "low national debt", low interest rates and was not a member of the euro.
In his speech to the BCC conference, Labour leader Ed Miliband briefly touched on the Portuguese crisis, insisting that Labour's plans would boost growth.
Meanwhile, Business Secretary Vince Cable has acknowledged the UK would be obliged to contribute to two funds operated by the EU and the International Monetary Fund, should they be used as the vehicle for the bailout.
'Bailout implications' Eurosceptic MPs have speculated that the cost could be as much as £4bn although Mr Cable said it was "way too early" to talk about the details.
"We are members of the IMF and the EU and there are some implications from that but obviously we need to think through what the details are," he told the BBC.
But "the main lesson" from the Portugal situation, he argued, was "do not go where these southern European countries have been in terms of public finance".
He added: "We could easily have been in the position Portugal has been but we are not fortunately as a result of the steps we have taken."
UK Independence Party leader Nigel Farage has called for an urgent statement on the bailout in the European Parliament, while the Conservative leader in Brussels and Strasbourg said the UK should boycott any moves to prop up the Portuguese economy.
"We wish the eurozone well in rescuing Portugal's economy but the UK cannot and should not play a part in the EU bailout," MEP Martin Callanan said, stressing there were sufficient funds in the eurozone fund to cover all eventualities.
"British voters will not accept that at home we are making tough but fair savings only to send money to countries that should never have been allowed to join the eurozone in the first place."
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