UK Politics

Osborne: UK ready to support Ireland over debt crisis

George Osborne
Image caption Mr Osborne said all options were being considered

The UK is "ready to support Ireland" in achieving economic stability, if it asks for help, George Osborne has said.

It was in Britain's national interest that its neighbour had a successful economy, the UK chancellor said.

Teams from the International Monetary Fund, European Commission and European Central Bank will travel to Dublin on Thursday to consider a bail-out.

The EU says it is "ready to act" but Ireland has said it does not need financial support.

However on Wednesday Irish finance minister Brian Lenihan indicated it may need a financial lifeline from the European Union and International Monetary Fund.

Speaking on RTE radio, he said: "The system has remained vulnerable in the light of continuing international uncertainties and we have to support the system and stabilise the system and if that requires help from our partners in the common currency area then we will have to avail of that help."

'National interest'

BBC business editor Robert Peston said Ireland's economy had become too dependent on a property bubble that left whole estates empty. That was pumped up by reckless lending from Irish banks - which are now thought to need a massive injection of new funds to protect them against future losses.

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Media captionForeign Secretary William Hague: ''It is in our national interest to be helpful towards Ireland''

Eurozone finance ministers agreed on Tuesday to send a joint EU-IMF 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.

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

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."

'Premature'

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.

Didier Reynders, who chaired the talks among European finance ministers in Brussels, 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."

Foreign Secretary William Hague told the BBC the crisis had to "dealt with one way or another" but it was, at the moment, "primarily a matter for the Irish government".

"It is premature to say what will happen in this particular case, it is up to Ireland whether they wish to ask for assistance," he said.

But he added: "We do have to bear in mind how closely connected the British and Irish economies are."

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Media captionEuropean Commission President: "We're not putting pressure on Ireland"

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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