German talks don’t bode well for Ireland

Any hopes that Ireland had of recouping some of the money it put into its banks, or having the banks borrow to cover any shortfall that shows up in the current asset tests, appear to be dashed by the big German political parties.

Ireland may also find itself under pressure to sign up to the financial transaction tax which would see derivatives taxed in Ireland for the first time and which the Government has resisted, fearing such funds would leave the country.

Both Angela Merkel’s centre right CDU and the Social Democrats, who have begun exploratory talks on forming a coalition government oppose the EU’s bailout fund, the ESM, giving money directly to stressed banks.