Between Iceland and Portugal? Ireland’s turn for cash

The last time the Treasury got involved in a bailout like this it was for Iceland – £2.35b from the UK. In one of those surreal twists that the banking collapse delivers freshly almost on a daily basis, we were lending them money so they could pay back their creditors in this country.

Interestingly, we haven’t had any of the principal back and aren’t due to until 2017-23. We come after the IMF on the creditors’ list and might do again, though one seasoned Treasury hand said Ireland was more of a going concern and would be expected to pay back quicker than Iceland.

You may recall the Icelandics had a referendum about this loan and refused to accept the terms. So, though we have been paying out, the exact interest rate has yet to be set.

Could George Osborne end up helping to bail out another EU country like Portugal or Spain, he was asked in the Commons? He chose to answer a different question – we wouldn’t feel obliged to give them a bi-lateral, country to country loan. Well, no … we might well not. But we wouldn’t be able to escape our obligations under the EU mechanism that requires us to chip in 13.6% of loans given under that scheme, not until 2013 anyway, when the current rules run out.

George Osborne started his statement by saying that an Irish default on the loans was an “unlikely scenario.” A bit later, he said it would be extraordinary if the Irish defaulted and that in the history of the IMF doing these sorts of things it hardly ever happened.

What it depends on now, of course, is Ireland getting back its economic health and growing strongly as it cuts like crazy while its people’s confidence is battered.

But maybe there’s another reason why Ireland is preferred to Portugal and Spain? George Osborne is heir to an Irish baronetcy. The Osborne Baronetcy of Ballentaylor in the County of Tipperary, and Ballylemon in the county of Wexford, was created in the Baronetage of Ireland on 15 October 1629 for Richard Osborne.