Osborne: UK ready to help Ireland

Mr Osborne said all options were being considered

UK Chancellor George Osborne has said the UK is “ready to support Ireland”, if it asks for help in bringing about economic stability.

It was in Britain’s “national interest” that its neighbour had a successful economy, Mr Osborne said.

There has been speculation the UK could loan billions of pounds to Ireland, one of its biggest trading partners.

Ireland says it does not need financial support but the EU says it is “ready to act”.

Eurozone finance ministers agreed on Tuesday to send a joint EU-IMF (International Monetary Fund) mission to Ireland to prepare for a possible bail-out of Irish banks, in an effort to prevent the crisis spreading to other Eurozone countries.

Ireland has suffered a deep recession, including collapsing property prices and a deeply-indebted banking sector.

The Irish government has had to bail out its biggest banks – the cost of which has pushed up its budget deficit, expected to be equivalent to 32% of GDP this year, to three times the size of the UK’s.

On Wednesday European finance ministers met in Brussels but said they did not discuss a potential bail-out for the Irish Republic, because the Irish government had not requested financial help.

Speaking after the meeting Mr Osborne refused to speculate on whether the UK was on the brink of announcing direct loans, or making a contribution to an EU bail-out package.

But he said: “We are going to do what we regard as being in the British national interest: Ireland is our closest neighbour, so it is in our national interest that the Irish economy is successful and that the Irish banking system is stable.

“Britain stands ready to support Ireland on the steps it needs to take to bring about that stability.”

He added: “I won’t speculate on what kind of assistance we might provide. There are options, and we are looking at all of those.”

But he said the Irish government had not asked for help and the EU was only having “perfectly sensible, precautionary discussions about what happens if Ireland sought assistance.”

BBC political editor Nick Robinson said Mr Osborne and Prime Minister David Cameron had taken a decision at last week’s G20 summit in Seoul that Britain would be ready to promise £7bn in loans as part of any Irish rescue plan.

Meanwhile European finance ministers have said they did not hold detailed discussions about an EU bail-out for Ireland, because the Irish had not requested one.

But Didier Reynders, who chaired the talks, said the EU was “ready to act” if needed.

After the meeting Mr Reynders said: “On the UK [providing assistance] nothing prevents people going further bilaterally or otherwise, but it’s far too early to be talking about anything before a request has come from the particular country.”

In the Commons Treasury Financial Secretary Mark Hoban said it was not for the UK to tell Dublin how to run “any part” of their economy – but it was in Britain’s interest for Ireland to prosper. Ireland was one of the UK’s biggest export markets, he added.

Tory backbencher Peter Bone said eurozone countries should be responsible for any bail-out for Ireland – and UK contributions to Europe should not increase at a time of spending cuts.

But Eurosceptic Conservative backbencher Bill Cash suggested the government provide a “UK-Irish but non-EU loan”, if it were affordable and in the national interest.

Once known as the “Celtic tiger” because of the strength of its economic boom, the Irish Republic has since suffered the deepest recession of any country in the developed world.

The Irish government has repeatedly denied that it is seeking outside support. Prime Minister Brian Cowen has said that he has not asked for bail-out money and that the Irish economy is well funded until next year.

An EU handout would be seen as a big loss of face for the Republic – essentially meaning that its survival and solvency was reliant on Brussels.

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