Britain to contribute £7bn to Ireland bailout

(Sharecast) The British taxpayer is set to stump up £7bn of the £77bn bailout of Ireland.

Chancellor George Osborne said: ‘It is in our national interest to help Ireland.’

Ireland’s economy is closely intertwined with Britain’s, a point that was underlined by Osborne.

‘There is a particular economic relationship with Ireland, there is a land border with Northern Ireland,’ he said.

‘Irish banks are involved in Northern Ireland.’

RBS, whose subsidiary Ulster Bank operates in Northern Ireland, is among the UK banks most heavily exposed to Ireland, on both sides of the border. Its shares have been fluctuating since the Irish crisis began to intensify. Many British companies have a strong position in Ireland, with the UK and Ireland often treated as one market.

The close relationship between the two economies was underlined earlier this month during British prime minister David Cameron’s visit to China, when he pointed out that Britain exports more to Ireland than it does to Brazil, Russia, India and China combined.

However, not everyone is happy about Britain being involved in the bailout of Ireland.

Conservative MP John Redwood said the European Central Bank should be responsible for keeping Ireland afloat and that as a non-euro member Britain should not be involved.

‘I don’t think this is Britain’s problem; I think it’s a euro area problem,’ he said.

Fellow Conservative MP Douglas Carswell said: ‘If we are going to pay to solve this crisis we should pay Ireland to quit the euro.’

Sam Bowman, head of research at the think tank the Adam Smith Institute said Britain’s involvement in the bail-out ‘puts the interests of the European Union and the eurozone before the interests of Ireland and the British Government should have no part in paying for it’.

Osborne pointed out that Britain will not join any permanent bailout mechanisms.

‘Let’s make sure Britain is not part of that, because we’re not part of the euro,’ he said.

Ireland’s acceptance of the bailout has brought some calm to money markets in early dealings. EU Finance Commissioner Olli Rehn, speaking in Brussels, said the loans would be provided to the Republic over a three-year period.