Britain has no plans to offer the Portuguese government a direct loan as it seeks an international bail-out, George Osborne insisted on Friday. The Chancellor said he remained focused on reducing the UK's budget deficit, which stands at about £122bn this year, as he spoke at a meeting of European finance ministers and central bank governors in Hungary.
"I made it clear that unlike the Irish case the UK will not be making a bilateral loan to Portugal. British taxpayers' money will not be lent directly to Portugal," he said.
Jean-Claude Trichet, president of the European Central Bank, said he is ready to begin negotiating with the Portuguese government immediately - insisting the "hard work" should begin straight away. Mr Trichet said Portugal needed to agree a package containing "ambitious fiscal adjustment" in order to "safeguard fully financial stability in Portugal and by way of consequence, in the eurozone".
However, he denied pressuring Portuguese banks to persuade the country's interim government to seek financial support. "We didn't force the banks to do anything. We didn't force the government or the authorities in general to do anything," he added.
Mr Trichet's comments were made a day after the Portuguese government formally requested a bail-out, raising the prospect of pay cuts, reduced welfare benefits, labour market reforms and a bank recapitalisation. Analysts estimate Portugal will seek between €60bn (£52.9bn) and €90bn. (read more)
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