Britain assists ‘friend in need’

IT is overwhelmingly in Britain’s national interest for Ireland to have a stable economy and banking system, British Chancellor George Osborne said yesterday.

Updating MPs on British involvement in the international bailout of the Irish economy, Mr Osborne said the country was a major trading partner with a banking sector “interconnected” with Britain’s.

Britain’s total contribution to the support package is thought to be around €8.2bn but in a statement to the Commons, Mr Osborne said it was right to help a “friend in need”.

Shadow chancellor Alan Johnson said Labour was “in principle, content to support a role for Britain in assisting Ireland to secure economic stability”.

Mr Osborne told the Commons: “The current Irish situation has become unsustainable. Their sovereign debt markets had effectively closed and had little prospect of reopening.”

Interest rates on Irish debt had hit “record levels” and the country’s banks were “completely reliant on central bank funding”.

Britain was an “important shareholder” of the IMF “and we will meet these multilateral obligations”, Mr Osborne said but added the institution was able to meet the cost.

He said, while Britain was not part of the eurozone stability fund, it was involved in the European mechanism.

Meanwhile, Swedish Finance Minister Anders Borg said his country will only provide a loan if the euro member delivers a “credible” restructuring of its public finances.

“We stand ready to consider a Swedish bilateral loan to Ireland, but it is very important to underline that this needs broad political support in the Swedish parliament before we can go through with such a programme,” Mr Borg said. “It also requires that we see a very sustainable and very credible fiscal restructuring from Ireland and that they have a bank restructuring that is perceived to be credible.” Sweden could offer up to €1.1bn.