Resist more bailouts, Cameron told

David Cameron should resist any pressure on Britain to take part in a bailout for Portugal, the Conservative MEP leader said today.

Martin Callanan said: “We wish the eurozone well in rescuing Portugal’s economy, but the UK cannot and should not play a part in the EU bailout.”

Mr Callanan used the Conservative grassroots website Conservativehome last week to urge the Prime Minister to mount a legal challenge, if necessary, to avoid UK involvement in another multibillion-pound payout only months after a financial rescue for Ireland including a UK pledge totalling about £7bn (€8bn).

Today he insisted that the scale of anticipated Portugal assistance – up to 80 billion euros – could be covered by an existing eurozone-only fund which did not need to involve the UK.

“The eurozone has set up a €440bn fund, the European Financial Stability Fund, to cover this kind of eventuality and so far only €17.7bnof that has been allocated to Ireland.

“Even if the uppermost figure of €80bn is needed (for Portugal), there will be enough remaining to cover another bailout and retain the Fund’s AAA rating.”

In Ireland’s case, a separate EU fund involving all 27 member states was also called upon: EU leaders used a Treaty clause – Article 122, designed for “natural disasters or exceptional occurrences beyond its control”.

The clause, never foreseen as a cushion for economic shocks, temporarily locks all member states in as guarantors of any loans and was signed by the then chancellor Alastair Darling – and fiercely opposed by the man who replaced him soon afterwards, George Osborne.

The move committed the UK to a financial guarantee of about 13.6% of the €60bn pot, in addition to a UK share of an IMF bail-out to Ireland and a voluntary bilateral contribution from London to Dublin.

A new, permanent EU bailout fund specifically to deal with future eurozone economic crises, has since been put in place, involving just the 17 single-currency member states.

But it comes into force only in mid-2013, and meanwhile, EU officials insist, any more bailouts continue to oblige all 27 member states to bear some of the burden from the €60bn “disasters” contingency.

Mr Callanan said the “natural disasters” fund should not be applied again.

He said: “The legality of bailouts under Article 122 of the EU treaties is still highly dubious. The Article was intended to cover natural disasters, not bailouts for countries who have sleepwalked into this crisis through their own socialist policies.

“I am glad to see the Treasury indicating that Ireland was a special case and that a similar bilateral offer for Portugal is not on the table. We must stick to our guns and remind the other member states that we have the treaty on our side.

“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.

“Already the media has turned its sights on other eurozone countries. We need to make it clear that we will honour our IMF obligations but we cannot afford to make any further payments to the EU.”

Mr Callanan warned: “Europe is sinking fast under the weight of its own uncompetitiveness and debt. It must not be allowed to take the UK with it.”