George Osborne has insisted that the UK will not find itself in the same trouble as Portugal George Osborne is discussing the terms of a possible bailout of the Portuguese economy with his European counterparts.
The UK chancellor is taking part in a meeting of EU finance ministers in Hungary dominated by Portugal’s request for external help to meet its debts.
Eurosceptics have warned that the UK may have to underwrite £4bn of any loan given, under existing EU arrangements.
Ministers have said it is premature to talk about the details of the UK’s involvement in any rescue package.
Friday’s Ecofin meeting is the first opportunity for the EU’s other 26 nations to consider the implications of Portugal’s call for financial assistance.
Although the country’s caretaker government has yet to make a formal request, it is believed a rescue package of up to 80bn euros (£70bn) may be needed.
The finance ministers are considering the size and structure of any bailout, including the likely financial terms and the conditions attached to it, amid reports it could be finalised by the middle of May, ahead of a general election in Portugal in early June.
“There would have to be a cascade of accidents before the British taxpayer incurred any direct loss from Portugal’s woes”
Mr Osborne, who was not due to attend Friday’s meeting before Portugal’s debt crisis escalated, has warned that any bailout – such as those given to Greece and Ireland last year – would come at a “huge cost” to the Portuguese people.
He has so far declined to comment on the UK’s likely involvement in any rescue package, following suggestions by some MPs that EU members which do not use the single currency should not be obliged to rush to the aid of those which do.
Conservative MP Bill Cash has said the group of countries using the euro “should look after itself without any British contribution whatsoever” and that sufficient funds existed within a eurozone-supported fund to which the UK does not contribute.
While the UK’s “implied” contribution to any Portuguese bailout would be about £4.2bn, on the basis of its existing financial commitments to emergency funds operated by EU and the International Monetary Fund, the BBC’s Business Editor Robert Peston said this liability was “pretty indirect”.
“There would have to be a cascade of accidents before the British taxpayer incurred any direct loss from Portugal’s woes,” he said.
“Portugal would have to default. And the cost of that default would have to tip the EU’s Budget into the red before there was any draw down from the UK Exchequer.”
The UK has ruled out providing any assistance on a bilateral basis as it did with Ireland earlier this year.
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.