Eurozone crisis shows debt dangers for UK: Osborne

Britain risks suffering a debt crisis like those seen in eurozone members Greece, Ireland and Portugal if it fails to cut a record peacetime budget deficit, UK finance minister George Osborne said on Thursday. Osborne cited the Portuguese crisis as ballast for the government's deep public spending cuts, deflecting concerns from eurosceptic members of the ruling Conservative party about exposure to the woes of another European partner.
-- Deficit-deniers playing 'Russian roulette'
Britain, not part of the eurozone, is not planning a bilateral loan for Portugal, government sources said. Its contribution to a Portuguese rescue depends on how it is structured but would be capped at around 4 billion euros ($5.7 billion) if Portugal got a similar deal to Ireland which received 67.5 billion euros in international support.
Rejecting opposition and union criticism that his deficit reduction measures are too severe and risk harming a fragile economy, Osborne said reversing the policy could expose Britain to the same dangers as deeply indebted countries in the eurozone.
"If you hear the stories about the cuts and still wonder why our country needs to take these difficult decisions, then look at what is happening around us. First Greece, then Ireland, today Portugal," Osborne said in a speech to the British Chambers of Commerce, a business lobby group. "Those in our country who deny the urgent need to deal with our deficit are playing Russian roulette with Britain's national sovereignty."
Britain did make a bilateral loan of around 3.25 billion pounds to its neighbour and major trading partner Ireland last November, as part of its 7 billion pound contribution to that bailout. The government has staked its reputation on eliminating the budget deficit, which has swollen to 10 percent of GDP, by the time of the next election in 2015.
The fate of both coalition partners - Conservatives and Liberal Democrats - also rests on what state the economy is in four years down the line. Britain's economy is recovering, but the process will be choppy, Osborne added. "Britain is putting its house in order," he said. "We have put in place a credible deficit reduction plan which is now taking effect."