Tuesday, November 16, 2010

Too close for comfort

Questions in the UK House of Commons today reveal interesting tensions near the surface on the costs and benefits to the UK of participating in any lending package for the Republic of Ireland.  First, question to the Economic Secretary to the Treasury --

David Simpson (Upper Bann) (DUP): Can the Minister confirm that the international counterparts discussed the subject of the Republic of Ireland, its deficit and the possible EU bail-out for it? Will that cost the United Kingdom money?

Justine Greening: At this stage, we cannot speculate about other countries’ finances. Obviously, the Irish are taking very difficult decisions and actions to try to get the situation under control. I do not think that we should pre-empt actions that Ireland or any other country takes and the impact that such actions may ultimately have on the UK taxpayer.

And then from John "Vulcan" Redwood to the Chancellor --

Mr John Redwood (Wokingham) (Con): Given that the Irish Government have said that they neither want nor need a bail-out, will the Chancellor support them at ECOFIN and put off those people in the EU who seem to want to make a crisis out of a problem?

Mr Osborne: There is an enormous amount of speculation about Ireland at the moment to which I do not propose to add. The Irish Government have said clearly that they have not sought assistance and that they are taking difficult steps to deal with their fiscal situation. They will make further announcements about their Budget situation in the next few weeks. I make the general observation that what is going on at the moment highlights the fact that concerns about sovereign debt issues have not disappeared and we should be grateful that, thanks to the actions of this Government, we have moved Britain out of the financial danger zone.

Thus there will be influential factions hostile to an EU lending package on the grounds of one or more of the following: it looks bad for a country that used to be the trailblazer for austerity, it will be yet another European project to rein in a low tax country, and -- for the Northern Irish Unionists -- it could be interpreted as assistance to their cantankerous neighbour.

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