Member News
The UK is still considering whether to make a bilateral loan to Ireland to help stabilise the country's beleagured banking system, the chancellor told MPs today.
George Osborne came to the House to make a statement on the financial crisis across the Irish Sea, and reiterated that Britain stands ready to help.
He told MPs that any bilateral loan would be part of the rescue package being put together by the EU and IMF.
Osborne said it would be "billions rather than tens of billions".
It would not add to the UK's sizable debt as the Irish would give an "asset" in the form of a pledge to repay the money.
The international package is thought to amount to around 100bn euros, with one third from the IMF and the rest from EU funds.
The UK will also back Ireland's loans as members of the IMF and the EU.
Although the UK could vote against money from Brussels, Osborne said that it would be "disruptive" and not in the national interest to do so.
Ireland accounts for five per cent of UK exports, he told the House.
It shares a land border with the UK and two fifths of Northern Ireland's exports go south of the border, as well as having interconnected banking sectors across the island of Ireland.
Any loan would have to be repaid and Sweden is also considering a bilateral loan to Ireland.
For all these reasons it is in the national interst to support Ireland, Osborne said.
Shadow chancellor Alan Johnson said Labour supports the government's plans in principle and called Ireland "a friend in need".
He asked if Ireland would be asked to raise its corporation tax rate as part of the international deal and asked for more details on the conditions of any bilateral loan.
Johnson referred to foreign secretary William Hague's comments that the euro may not survive and asked if "I told you so" was now part of economic policy.
The chancellor said the IMF and EU teams are still deciding the terms of the loan and any bilateral loan would not differ greatly from those.
He also told MPs that the Irish should be allowed to set their own tax rates.
Former chancellor Alastair Darling (Lab, Edinburgh SW) said Osborne is "absolutely right" to help Ireland and said if that nation is to succeed in future its banks must be reformed.
David Blunkett (Lab, Sheffield Brightside and Hillsborough) asked why the government would lend to Ireland but not Sheffield Forgemasters, "another friend in need".
Osborne pointed out that Ireland is a sovereign nation.
Alan Beith (Lib Dem, Berwick-upon-Tweed) said the voters will be angry at having to bail out bad British banks and now bad Irish banks as well.
Have your say...
Please enter your comments below.