Portugal’s poser

THE economic crisis in Portugal is a timely reminder of why the coalition Government had to take swift action to prevent Britain’s finances from falling into the abyss last summer.

There has been widespread anger at the level of cuts being imposed by Chancellor George Osborne, but whatever the arguments about where the axe should fall, few would disagree that years of profligate public sector spending and spiralling national debt had to be brought under control.

Liam Byrne’s spectacularly misguided letter that he left his shortlived Treasury chief secretary successor David Laws – “I’m afraid there is no money, good luck” – was, at the very least, an honest assessment of Labour’s economic legacy.

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The political debate still rages as to how best to rescue the situation, but the majority of the country’s sharpest business minds had little doubt when they backed the coalition’s immediate action to prevent Britain following Greece, Ireland and now Portugal into economic oblivion.

And the desperate struggles of these euro-zone nations is concrete justification of Britain’s decision to resist calls to join the floundering currency. Even in pro-European Germany, there is major opposition to further significant bailouts; one of the world’s most powerful economies fears that it will be dragged down by these obligations.

Britain, too, must salvage what it can from the wreckage of its own finances before it looks to help others with generous loans. Yesterday, the Bank of England’s Monetary Policy Committee agreed to keep interest rates at a record low of 0.5 per cent. This, coupled with worryingly high inflation and unemployment rates, should be more than enough to concentrate Treasury minds, so that the national interest is prioritised.