BRITAIN’S liability for shoring up the collapsing euro soared to a colossal £12.5billion last night following a European Union rescue deal for Portugal.
Chancellor George Osborne yesterday agreed with other European finance ministers that the UK will pour £4.3billion into a £68billion international bailout package for the debt-laden Portuguese economy.
On top of cash already pledged to Ireland and Greece, the move raises Britain’s financial involvement in supporting the crisis-hit eurozone to £500 for every household in the country.
And fears were growing that the total liability figure could rocket to more than £15billion if Britain is forced to contribute to an expected second international bailout for the Greeks.
Last night critics savaged the Treasury’s decision to join another lavish EU rescue at a time of swingeing austerity measures in the UK.
Tory MP Douglas Carswell said: “This is a disastrous deal for Britain. At a time of public-spending cuts at home, millions of hard-working families around the country will be wondering how we got into this mess.
It is extraordinary in the week when it becomes apparent that lenders will not get the money back from the Greek bailout that we should be going ahead with throwing billions into a Portuguese bailout.”
Euro-MP Nigel Farage, leader of the UK Independence Party, said: “Osborne must decide who he wishes to please, either the UK taxpayer or his fellow EU finance ministers? Who is he working for – us or them?”
Charlotte Linacre, campaign manager at the TaxPayers’ Alliance, said: “This news is disastrous. The Government is failing UK taxpayers by not resisting further EU bailouts. It’s utterly wrong that while we look for necessary spending cuts in the UK, any savings made are being squandered propping up a failing eurozone.”
Finance ministers from the 27 EU nations agreed the £68billion bailout for Portugal at a meeting in Brussels that went ahead in spite of the arrest of International Monetary Fund chief Dominique Strauss-Kahn in New York on sex attack allegations.
The decision to help Portugal follows fears about a crippling sovereign debt crisis which threatens to bankrupt the Lisbon government.
Mr Osborne agreed that Britain will contribute £4.3billion but Treasury officials insisted the Chancellor was a “reluctant participant”, forced into joining the rescue because of a deal agreed by his Labour predecessor Alistair Darling last year.
They pointed out that the cash was a loan and not a handout, and claim that stringent conditions attached to the bailout would prevent the Portuguese government from defaulting on the credit.
But the contribution comes on top of £1.2billion that Britain plunged into an IMF aid package for Greece last year and a further £7billion in emergency loans to Ireland. It means the total British liability for euro bailouts so far has reached £12.5billion. Worryingly, the figure is around half the cash saved by the Government this year through austerity spending cuts.
Some experts warn that the British Government may be forced to contribute a further £2.6billion to increasing the EU and IMF support for Greece, increasing the UK’s liability to £15.1billion. That figure is equivalent to £604 for every household in the country, adding further weight to the Daily Express crusade to get Britain out of the EU.
Treasury sources were last night insisting that Britain will not be expected to join in a further EU financial package for Greece. A spokesman said: “We were not part of the original European bailout for Greece and there is no proposal to bring us into the next one.”
Officials also pointed out that yesterday’s Brussels meeting agreed a legal text that means Britain will not play a part in any EUrozone bailouts after 2013.
..and from the Daily Mail:
Every family in Britain will contribute £500 to bail out the euro after George Osborne last night signed up to a rescue fund for Portugal.
The Chancellor and fellow finance ministers agreed a Europe-wide £68billion deal to prop up the single currency by rescuing Portugal, which will cost UK taxpayers £4.3billion.
The loan deal, which involves the EU and International Monetary Fund, brings the total liability for the UK to £12.5billion from the three financial rescue efforts so far – or £500 per family. It will be formally signed at a meeting in Brussels this morning.
The UK has already forked out £7billion to help the Irish Republic and a further £1.2billion through the IMF during the first bailout of Greece last year.
The one bit of good news for British taxpayers is that Mr Osborne last night got fellow EU governments to sign off an agreement that the UK will not have to contribute to any further bailouts after 2013. That could save taxpayers up to £57billion if the single currency continues to have problems.
But with the prospect of a second bailout for the bankrupt Greek economy looming taxpayers may not get immediate relief from saving the single currency.
Last year, in the dying days of the Labour government, then Chancellor Alistair Darling signed Britain up to an EU-wide bailout fund that does not expire until 2013.
Mr Osborne has insisted that he does not wish to get dragged into a bailout of Greece. But he may have no choice. There is £1.4billion of British money left in the EU bailout fund, which could be used to prevent the Greeks defaulting on last year’s debts. If the IMF also chipped in, that would bring UK liabilities to £2.6billion.
And it would bring the total forked out to £15.1billion, the equivalent of £604 for every family in the land.
A Treasury source: ‘The deal is done on Portugal. We do not want to get involved in a Greek bailout. Christine Lagarde, the French finance minister, has said that she doesn’t think the EU-wide mechanism should be used either.
‘We have got the prospect of future EU bailouts off the books as quickly as possible.
‘After 2013 the Government has made sure that British taxpayers do not have further liabilities of up to £57billion.’
Read the full Daily Mail article here.
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