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Can England really afford to help Ireland?
Posted by Mahir Prasad
on
00:44
Following a month of announcements about the various budgetary cuts, the last thing the British taxpayer wanted to hear was more money being taken out of their pocket.
Unlucky for them though that’s exactly what they woke up to today, when Chancellor George Osborne confirmed to the BBC that England would be dishing out around £7 billion to help the sinking economy of the Republic of Ireland.
Osborne’s announcement is a puzzling one considering the amount of money they are proposing to loan to Ireland is similar to the amount the Government want to save this year.
So then why hand out the loan when you clearly have a financial crisis of your own?
Need to help Ireland
Prime Minister David Cameron defended the decision to bail out Ireland saying, “We export more to Ireland than we do to Brazil, Russia, India and China combined. Our banking systems are linked, our finances and economies are very linked so of course we stand ready to help.”
As the Guardian very rightly pointed out in an article a few days ago, a stable Irish banking system is crucial to the UK.
Not only because Ireland is its fifth-largest export market for Britain, but also because state-backed banks like the Royal Bank of Scotland and Lloyds have loaned up to £53 billion to Irish companies and individuals.
So if these debtors default on their loans then the UK could soon be where Ireland is today.
It’s the Euro zone’s problem
However, despite the obvious reason to bail out Ireland, the Government is being criticized for helping a country whose economy aids the Euro.
Conservative backbencher Douglas Carswell told the BBC: "We shouldn't be paying to help keep Ireland in the euro. If we are going to pay to solve this crisis, we should be helping to pay Ireland to quit the euro.”
Experts like the Telegraph’s Daniel Hannan believe that Ireland is where it is because it gave up its individual currency and joined the Euro zone.
Chancellor Osborne though responded by telling the BBC, “Ireland is our very closest economic neighbour. I judged it to be in our national interest to be part of the international efforts to help the Irish.”
He also stressed that Britain does not want 'to be part of a permanent bail-out mechanism for the euro'.
Unlucky for them though that’s exactly what they woke up to today, when Chancellor George Osborne confirmed to the BBC that England would be dishing out around £7 billion to help the sinking economy of the Republic of Ireland.
Osborne’s announcement is a puzzling one considering the amount of money they are proposing to loan to Ireland is similar to the amount the Government want to save this year.
So then why hand out the loan when you clearly have a financial crisis of your own?
Need to help Ireland
Prime Minister David Cameron defended the decision to bail out Ireland saying, “We export more to Ireland than we do to Brazil, Russia, India and China combined. Our banking systems are linked, our finances and economies are very linked so of course we stand ready to help.”
As the Guardian very rightly pointed out in an article a few days ago, a stable Irish banking system is crucial to the UK.
Not only because Ireland is its fifth-largest export market for Britain, but also because state-backed banks like the Royal Bank of Scotland and Lloyds have loaned up to £53 billion to Irish companies and individuals.
So if these debtors default on their loans then the UK could soon be where Ireland is today.
It’s the Euro zone’s problem
However, despite the obvious reason to bail out Ireland, the Government is being criticized for helping a country whose economy aids the Euro.
Conservative backbencher Douglas Carswell told the BBC: "We shouldn't be paying to help keep Ireland in the euro. If we are going to pay to solve this crisis, we should be helping to pay Ireland to quit the euro.”
Experts like the Telegraph’s Daniel Hannan believe that Ireland is where it is because it gave up its individual currency and joined the Euro zone.
Chancellor Osborne though responded by telling the BBC, “Ireland is our very closest economic neighbour. I judged it to be in our national interest to be part of the international efforts to help the Irish.”
He also stressed that Britain does not want 'to be part of a permanent bail-out mechanism for the euro'.
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