While Jose Socrates, Portugal's caretaker prime minister, welcomes the EU and IMF bail out saying that public sector wages will not have to be cut, the UK is preparing to open its wallet to fork out £4.4 billion to add to Portugal's bail-out package.

Under the terms of both the IMF and an EU financial agreement signed up to by the last Labour government just before the coalition was formed, the UK is obliged to contribute to this bail-out. With the cost being estimated at about £180 per household.

The money we will hand over is a loan, so we should be getting the money back in due course together with associated interest. But the interest rate has not been set, so we do not know what we are getting into. The interest rate will be set at a meeting of EU finance ministers on 16th May.

But there is concern that this loan will end up just being a give-away. Conservative MEP for South East England, Daniel Hannan, said "Don’t give me any nonsense about this being a loan. That’s what we were told about Greece, which is now openly negotiating a default. In Portugal, as in Greece, debt is growing faster than GDP, making a default more or less inevitable". He also questioned whether we were putting the survival of the Euro ahead of British interests.

Douglas Carswell, Conservative MP for Clacton, said that not only were we handing over money while we aourselves were in trouble but also that "This bail-out is illegal. It is going to put Portugal further into debt. We should not be doing this".

There is also the point that any money we do hand over we will have had to borrow ourselves in the first place. That means we will be paying out interest at one rate to get it back from Portugal at another as yet unknown rate.

But not is all settled yet. This bail-out has to be agreed by all 27 EU member states, which could yet be stymied by a political party from Finland, the True Finns Party. They are likely to be a major power in any coalition agreement in that country and have expressed opposition to the bail-out.

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