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June 28, 2022

EU begins Irish Republic bail-out talks

European finance ministers were meeting in Brussels yesterday, with the issue of a possible bail-out of the Irish Republic still top of the agenda, according to BBC. EU finance commissioner Ollie Rehn said on Tuesday plans were being made for a potential rescue programme, should the Irish government ask for help. As he arrived for the meeting, Rehn said the EU was engaged in “effective” consultation with the Irish government.
British Chancellor George Osborne said the UK was “ready to support Ireland”. There have been reports that the UK is considering offering billions of pounds of direct loans to the Irish Republic. But a spokesman for the UK Treasury said: “There has been no application from Ireland and we are not speculating on the situation.”

At the same time, concerns have been raised about the eurozone’s bail-out of Greece after Austria said Greece had not fulfilled its obligations under the EU-backed aid package. Austria has yet to submit its December contribution to the bail-out. This followed the release of figures on Monday showing that Greece’s budget deficit was worse than previously thought.

When asked if the UK should assist the Irish Republic, EU commissioner Mr Rehn said: “That is under discussion and it is natural because the United Kingdom and UK banks have a very significant exposure in Ireland. There is a very strong interconnection in the banking sector and the financial system between the two countries.”

Osborne said: “We’re going to do what is in Britain’s national interest. Ireland is our closest neighbour and it’s in Britain’s national interest that the Irish economy is successful and we have a stable banking system,” he said, ahead of the meeting of the Economic and Financial Affairs Council. The Irish government has repeatedly denied that it is seeking outside support. Prime Minister Brian Cowen has said that he has not asked for bail-out money and that the Irish economy is well funded until next year. Tuesday’s meeting of eurozone ministers and financial institutions in Brussels came against a background of renewed financial market turmoil. At the centre of this has been the markets’ fear that the governments of the weaker eurozone countries – particularly the Irish Republic – cannot afford to repay their huge debts. Rehn said that “the Irish authorities are committed to working” with the EU, the European Central Bank and the International Monetary Fund to calm market turmoil.

A statement issued after the meeting praised Ireland’s efforts to combat its problems: “The Eurogroup welcomes the significant efforts of Ireland to deal with the challenges it faces in the budgetary, competitiveness and financial sector areas.”

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