Britain ready with financial aid for stricken Ireland

10:27, November 19, 2010      

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Britain stood ready to support the Irish government in its financial crisis with possibly up to 7 billion pounds (about 11.2 billion U.S. dollars), although it was not clear if this would be part of an international package or coordinated with an international bailout.

Ireland is Britain's closest neighbor, and both are members of the European Union (EU). Britain has significant trading ties with its westerly neighbor and its financial institutions have extensive involvement in Ireland's finances.

A spokesman for British Prime Minister David Cameron told Xinhua on Thursday afternoon that he "would not speculate" if help for Ireland would come from bilateral aid or loans rather than, or alongside, an EU-wide bailout.

On Wednesday Britain's finance minister, Chancellor George Osborne, outlined Britain's stance. "Ireland is our closest neighbor -- the only country with which we share a land border -- it is in our interest their banking system is stable. Britain stands ready to support Ireland to bring stability," he said.

Osborne was careful to stress that Britain stood ready to make a loan because it was "a good neighbor", and that British banks were not in danger of being undermined. "We're very clear: the UK banks have passed stress tests, the UK banking system is well capitalized," he said.

Osborne added "Our engagement in this is because we are good neighbors of Ireland, not because we have particular concerns about any particular UK bank."

On Thursday, the prime minister's spokesman said Cameron fully supported the chancellor because it was in "Britain's national interest that the Irish economy was successful because of the links between our own economy and theirs".

The spokesman said that there had been no talks between Irish taoiseach Brian Cowen or Irish officials over the last couple of days, and that it was an issue that the Treasury was leading on and there had been a discussion over lunch at the Ecofin meeting of EU finance ministers in Brussels on Wednesday.

The prime minister's spokesman said the Irish Government had taken "some difficult decisions to deal with their public finances. "

On Thursday Irish central bank governor Patrick Honohan publicly confirmed that he expected the Irish government to be offered a loan jointly by the EU and International Monetary Fund ( IMF).

A final decision has not been made, but it was expected that the EU-IMF loan could be as much as 80 billion euros (109 billion U.S. dollars).

Irish finances have come under pressure in the past two months as with Ireland overtaking Spain as the country most dependent on European Central Bank emergency funds to maintain liquidity in its banking sector, according to figures from the Royal Bank of Scotland.

Source: Xinhua


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