Well, David Cameron is doing his part to boost the Spanish economy — by EasyJetting to the country with SamCam to celebrate her 40th Birthday. But what about Spain’s peninsular cousins, the Portuguese? They were, more or less, the subject of George Osborne’s speech to the British Chambers of Commerce conference earlier — but not how they might have hoped. The chancellor didn’t dwell on the prospect of British help for their stricken economy, but he did cite Portugal as a kind of worst case scenario. “Today of all days we can see the risks that would face Britain,” he said, “if we were not dealing with our debts and paying off our national credit card.”
Ed Balls has since struck out against Osborne’s argument, describing it as “scaremongering”. But I’ve got another issue with it: namely, that the government is not “paying off our national credit card,” and that it is misleading of Osborne to suggest otherwise. I’ll point you towards my post from last week if you want the full explanation and all the graphs. But the basic point is this: the coalition will not reduce our national debt from its current level over this parliament, but will slow the rate at which it accumulates. As necessary as this task of deficit reduction is, few would describe it as “paying off the national credit card”. More accurate to say that, “we are using the national credit card less and less.” Otherwise the debate is skewed right from the off.
As for Portugal, Vince Cable has said that we have “obligations” towards the country as part of our membership of the EU and of the IMF. Elsewhere, a Treasury source claims that our exposure may be around the £2.6 billion mark. All of which throws up another credit card analogy: we, and a heap of other countries, may soon be Portugal’s little plastic friend.
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