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Osborne tells Radio 4 that Britain won't be part of future €uro bailout mechanisms

Tim Montgomerie

Euro The Daily Mail signalled its concern, this morning, at the news that the UK will contribute to the bailout of Ireland:

"Every family in Britain will have to contribute nearly £300 to prop up the ailing Irish economy. Chancellor George Osborne has agreed to pay £7.5billion towards an international bailout worth up to £85billion. This lands British taxpayers with an increase in the colossal debt burden – already £952billion – at a time of desperate cost cutting."

Speaking on Radio 4 at 8.10am, George Osborne confirmed that the UK would contribute "around £7bn" to rescue Ireland. Asked about Irish membership of the €uro the Chancellor said that he had been one of the opponents of the single currency but "I told you so" didn't amount to an economic policy. We had, he said, to help a "friend in need" with which Britain had major economic relations. He noted that Britain exported more to Ireland than to China, Brazil and Russia combined.

Significantly the Chancellor also implied that, as part of negotiations to be held later this year, he would ensure that Britain was not part of future €uro bailout mechanisms. Aides to the Chancellor are insistent that UK participation in helping Ireland, a major UK trading partner with significant links to London's banks, does not set a precedent for lending to other EU nations.

My own view is that George Osborne has taken the right decision. He has to deal with the world as it is, not as Eurosceptics would like it to be. Yes, Angela Merkel's unwise initiative on debt restructuring accelerated this immediate crisis. Yes, Ireland should leave the €uro. Yes, EU leaders are wrongly using this crisis to centralise more power. None of those things mean, however, that we can stand aside in this emergency situation and let Ireland pull other European economies off the cliff edge. There is a big question as to whether the Coalition is using this crisis to properly renegotiate Britain's relationship with Europe but the Chancellor has done what he needed to do today.

Three other links on this subject:

  • John Redwood: Do bail outs work?
  • Douglas Carswell: "Of course it is in our interest to see Ireland prosper.  Which is precisely why we must be prepared to help her escape from the Euro.  Until Ireland does so, she will either remain uncompetitive or suffer a fall in per capita GDP - or both."
  • Yesterday's ToryDiary: Cameron needs an emergency renegotiation plan for a post-€uro Europe


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