It’s no good talking about all these bailout mechanisms – Britain and Europe must deal with it. Brussels continues to fiddle while Portugal burns.
Apparently, Portugal has made no formal request at the moment. However, the press statement from the European Commission states:
“The Portuguese Prime-Minister, José Sócrates, today informed the President of the European Commission, José Manuel Durão Barroso, of the intention of Portugal to ask for the activation of the financial support mechanisms.”
There are key mechanisms in place to currently deal with the bailout.
The eurozone countries and not Britain should pay for the failed eurozone – €250 billion of the so-called European Financial Stability Facility (EFSF) can be used as loans. The Heads of State did already agree that the effective lending capacity of this “Facility” should be extended to €440 billion but that has not been finally agreed yet.
However, Britain is exposed under the European Financial Stabilisation Mechanism. That may be used and it probably will be and that is determined by Qualified Majority Voting. But if they do press ahead with this, Britain should refuse to pay because it is said that it is “legally unsound”. The British taxpayer should not be expected to participate and should not incur any liability.
The BBC is distorting the picture because there has been no formal request and they do not know, unless they are not disclosing their sources, which fund is being used. Nor are they stating that no formal request is being made.
If it is being decided behind the scenes that Britain will not contribute through the Stabilisation Mechanism then this is a victory for Eurorealists in Britain – but there is so much confused and inaccurate reporting.