City speaks out against Portugal bailout and Ed Balls’ political U-turn

TWO THIRDS of our Voice of the City panel think that the UK contributing to a European bailout of Portugal is the wrong decision, with 41 per cent branding the move “completely wrong” and 23 per cent “somewhat wrong”. Just 12 per cent of respondents think the bailout is “completely right”.

Comments submitted to the panel were withering, with most saying the UK should focus on problems closer to home before agreeing to help those further afield.

“We need to get our house in order regardless of what’s happening abroad. Rather than providing funds for bailouts for other countries, those monies could be used to reduce our deficit further,” said one respondent.

A minority did see the planned bailout as an opportunity for the UK to realise a return, however, with one panellist commenting: “Bearing in mind we can borrow the money at a four per cent interest rate and the Portuguese government will repay at 6.5 per cent, I think this is a reasonable bit of business.”

No fewer than 49 per cent of participants agree with chancellor George Osborne’s assertion that the Portuguese experience justifies the depth and speed of austerity cuts in the UK, and 15 per cent see the latest sovereign casualty as proof that UK cuts should be even more drastic. Only 4.5 per cent backed the view that Portugal showed that the UK’s cuts are being made too drastically, while 29 per cent said the countries were too different to compare.

Balls spoke out last week to say the UK should limit its contribution to the bailout fund, despite the agreement signed by Labour’s ex-chancellor Alistair Darling last year that the UK would contribute 13 per cent to the EU’s bailout fund. But only 17.5 per cent said this u-turn made them feel more favourable towards him. Twenty-eight per cent of those polled said that Balls’ scepticism had made them feel “much less favourable” towards him and 14 per cent somewhat less so.

“Balls’ comments display a level of complete ignorance as to how UK banks have a very substantial exposure across Europe in holdings of both sovereign and corporate debt in the countries affected, and the potential losses that could be suffered on a default,” said one.

Statistics were compiled from the 489 responses to the latest Voice of the City poll, printed in last Wednesday’s City A.M. and completed online by our City panel. Apply to join the panel at Participants could be in with the chance of winning a free luxury weekend to Paris. In September, we’ll put panellists who have responded to at least 80 per cent of surveys into a prize draw. Full T&Cs on request.