A new EU deal and the final bail out bill

George Osborne was less than obliging to Labour MPs questioning him in the Commons this afternoon. They were accused of talking utter rubbish, he queried whether it was worth them turning up their questions were so stupid.

Word has it he may be feeling slightly bruised himself soon when he sees what US diplomats were writing home about him when he was in opposition.

Meanwhile, the government is claiming a significant victory from the EU finance ministers gathering last night. The UK will not take part in any Europe-wide bail-out once the mechanism that Alistair Darling signed up to (originally £60b – now draining fast) is run dry. The government claims there will be no top-ups to that mechanism, originally devised to help bail out Eastern Europe’s new EU members from altogether different.

But that doesn’t mean the UK wouldn’t have to join in a rescue effort if, say Portugal, Spain or lately talked about Belgium, needed bailing out. We have obligations to provide credit guarantees under the IMF and we could make bi-lateral loans (though George Osborne emphasised in the Commons this afternoon that Ireland was a unique relationship).

As for Britain’s bail-out of its own banks, the OBR report today says the benefit/loss to taxpayers is “highly uncertain” but, “using latest market prices” it estimates an “eventual benefit to the taxpayer of £2b, including fees and other income.” A few lines down, the OBR report (p.121) says: “This estimate is highly sensitive to movements in the share prices of RBS and Lloyds … a 10% fall or rise from current levels would reduce or increase the estimate by around £10billion.”

When you think of RBS’s share price movements this year and its exposure in, say, Spain, it’s not completely unthinkable is it?