Chancellor
George Osborne has told MPs it is in the UK interest to join a rescue package
for the Irish economy – including a direct bilateral loan.
He
said Ireland was a “friend in need”, a major trading partner with a banking
sector closely linked to the UK’s.
Although
earlier reports put the loan amount at $11.3 billion, the chancellor said talks
were still continuing, although the figure was “in the billions”.
Shadow
chancellor Alan Johnson said he supported assistance “in principle”.
But
he added Britain was already contributing through the IMF and an EU mechanism, saying:
“Why are we also entering into a bilateral agreement? That money seems to
be extra.”
Irish
PM Brian Cowen has accepted up to $124 billion in loans from the European
Union.
Earlier,
Mr Osborne outlined some details of the “international financial
assistance package” to MPs at Westminster – saying it would support a
four-year plan for Ireland to cut its budget deficit to 3 per cent of GDP. It
would also support the reform of its banking sector.
He
told MPs: “We are doing this because it is overwhelmingly in Britain’s
national interest that we have a stable Irish economy and banking system.
“The
current Irish situation has become unsustainable. Their sovereign debt markets
had effectively closed and had little prospect of reopening.”
Asked
earlier about reports the UK would contribute $11.3 billion he said it was “around
that, it’s in the billions not the tens of billions”. But he said details
of the British, IMF and eurozone packages were still being worked out.
He
told MPs: “This is a loan we can afford to make and will get back.”
He
said Ireland accounted for 5 per cent of Britain’s total exports – and
two-fifths of Northern Ireland’s exports. Two of the four largest High Street
banks in Northern Ireland were Irish-owned, he added, and Irish banks also
issued sterling.
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