EU continues Irish debt-crisis talks

Europe’s finance ministers will hold more talks on the Irish debt crisis today as experts prepare for a possible bail-out – even though the Government insists it does not need help.

Negotiations between the 16 eurozone countries ended in Brussels last night with praise for Ireland’s own economic recovery efforts and gentle pressure on the Government to accept “preparations” for a bail-out programme.

Today the 16 will be joined by the remaining EU finance ministers, including British Chancellor George Osborne, who is said to be considering the offer of billions of pounds of bilateral British aid to Ireland.

A British Treasury spokesman refused to confirm reports in the Financial Times, stating: “There has been no application from Ireland and we are not speculating on the situation.”

After last night’s eurozone talks, EU Economics and Monetary Affairs Commissioner Olli Rehn said the Irish authorities had made a commitment to work with the EU, the European Central Bank – which is already supporting Irish banks with cheap loans – and the IMF, in a bid to placate jittery financial markets.

He said the meeting had resulted in “an intensification of preparations of a potential programme in case it is requested and in case it is necessary”.

But Finance Minister Brian Lenihan will repeat at today’s talks what he told the eurozone yesterday – that Dublin is not seeking any bail-out and is working nationally to restore its economy, with a tough budget to be published soon, and with a four-year recovery programme to be unveiled within days.

A Eurogroup statement acknowledged those moves, saying: “The Eurogroup welcomes the significant efforts of Ireland to deal with the challenges it faces in the budgetary, competitiveness and financial sector areas.”

It also said that, in the face of continuing market concern, “further reforms and stabilisation measures may be appropriate”.

Portugal, concerned about euro “contagion” affecting its weak economy, pushed hard for Ireland to accept a bail-out for the sake of the single currency.

Instead Ireland did agree to host officials EU, ECB and IMF officials in Dublin as part of preparation for a possible rescue programme.

The plans being considered will focus on the restructuring of Ireland’s banking sector, said Mr Rehn.

But no bail-out request seems imminent. An Taoiseach Brian Cowen told the Dáil in a speech yesterday that Ireland was making no “external application for support”.

He said: “Those that are now commenting on Ireland’s financial situation should also remember that the Exchequer is fully funded into the first half of 2011, so the impending sense of crisis that some wish to suggest the Irish State faces is not a fair reflection of the facts.”

But he conceded: “Clearly there is a need to bring stability to markets, here and elsewhere... It is in all of our interests that we find a credible, efficient and above all workable solution that will provide assurance to the markets and thereby restore confidence and stability.”