EU experts prepare for Ireland bail-out plan
EU finance ministers are looking at plans to help Ireland out of its debt crisis with experts ready for a bail-out – including a potential offer of bilateral aid from the UK, Faisal Islam explains.
The negotiations between the 16 eurozone nations ended last night in Brussels with gentle pressure on the government to accept “preparations” for a bail-out.
The 16 eurozone countries will be joined today by the remaining EU finance ministers, including Britain’s Chancellor George Osborne. He is reportedly considering the offer of bilateral British aid to Ireland, which will cost millions of pounds.
A British Treasury spokesman refused to confirm the reports in the Financial Times, saying: “There has been no application from Ireland and we are not speculating on the situation.”
Meanwhile Ireland will host EU, ECB and IMF officials in Dublin as part of preparation for a possible rescue programme.
Will Britain have to lend billions directly to Ireland?
The strength of George Osborne's statement this morning on the way in to the Brussels crisis meeting was unexpected, writes Economics Editor Faisal Islam.
The idea that Britain could make bilateral loans to Ireland would have been utterly unthinkable up until this week. It is now on the cards.
"We're going to do what is in Britain's national interest," said the Chancellor.
Read more - will Britain lend billions directly to Ireland?
Olli Rehn, the EU Economics and Monetary Affairs Commissioner said last night that Ireland has made a commitment to work with the EU, the European Bank and the IMF, in a bid to placate the shaky financial markets.
At the conclusion of the meeting, Rehn said there was “an intensification of preparations of a potential programme in case it is requested and in case it is necessary”.
Yesterday Irish Finance Minister Brian Lenihan told the eurozone that Dublin was not seeking a bail-out and is working hard nationally to mend its economy, by enforcing tough budgets which will be published shortly and its four year recovery programme, due to be announced in days.
He is expected to reiterate this stance in the wider economic talks later.
A statement from the Eurogroup said: “The Eurogroup welcomes the significant efforts of Ireland to deal with the challenges it faces in the budgetary, competitiveness and financial sector areas.”
The Eurogroup added: “Further reforms and stabilisation measures may be appropriate”.
Contagion threat
Portugal are concerned about the euro contagion affecting its weak economy and is pushing hard for Ireland to accept the bail-out for the sake of the single currency.
The plans considered will centre on the restructure of Ireland’s banks, but no bailout request appears to be imminent.
Prime Minister Brian Cowen said yesterday that Ireland is making no “external application for support”.
The impending sense of crisis that some wish to suggest the Irish state faces is not a fair reflection of the facts. Irish Prime Minister Brian Cowen.
He said: “Those that are now commenting on Ireland’s financial situation should also remember that the Exchequer is fully funded into the first half of 2011, so the impending sense of crisis that some wish to suggest the Irish state faces is not a fair reflection of the facts.”
But he conceded: “Clearly there is a need to bring stability to markets, here and elsewhere… It is in all of our interests that we find a credible, efficient and above all workable solution that will provide assurance to the markets and thereby restore confidence and stability.”