In all the excitement about a whole penny being taken off fuel duty, we should be careful not lose perspective of the bigger picture. As the budget was being delivered yesterday, Portugal entered the final stages of economic collapse. It now seems virtually inevitable that the country will take a bailout from the EU. This makes it the third country, after Greece and Ireland, to seek a bailout. Many argued that those bailouts would create a moral hazard, encouraging more countries to take bailouts. Sadly, Portugal looks like a case in point. 

Portugal’s crisis is more comparable to Greece’s than Ireland’s, as Ireland’s budgetary crisis was brought to a head by a banking crisis, whereas Greece and Portugal’s crises are almost entirely due to poor budget discipline. And the Portuguese government fell yesterday because parliament rejected its fiscal austerity plan (which might have allowed Portugal to avoid a bailout) as being too harsh. In other words, this bailout can’t even be blamed on bankers – the fault lies with Portugal’s political class, for maxing out its credit card and refusing to pay the price of austerity.

The obvious and crucial question is: why should we pay for this bailout? The case for the Irish bailout – the British banks have so much exposure to Irish ones that really this was a cut-price bailout for ourselves – doesn’t work here. British banks have very little exposure to Portugal (though Spanish banks have quite a lot – a little over $100bn, according to the Bank of International Settlements). 

What’s the cost for Britain in this? Open Europe estimates that we’ll end up spending between £3bn–£4bn on any bailout that Portugal gets, which is about as much as it would cost to raise the tax-free allowance by another £700 (or to cut the fuel duty by a bit more, if the government wants positive headlines). The Portuguese are in the mess they’re in because, frankly, they've failed to balance their books. British taxpayers are already paying for fiscal recklessness at home – why should they have to pay for it abroad as well? As with the banks, so it is with the eurozone countries – one bailout is leading to many, as the alchemists of loss slip away while the rest of us pay for their mistakes.