Cameron says no pressure from UK
UNITED KINGDOM:THE UNITED Kingdom, which could be left with a €7 billion bill if Ireland accepts emergency EU funding to prop up banks, is not to add to the pressure coming from other EU capitals on Ireland to act quickly.
British prime minister David Cameron told the House of Commons yesterday that Ireland was an extremely important trading partner and the UK’s own economic health could suffer if Ireland ran into major problems.
“If you look at the Irish economy, Ireland is an enormously important trading partner with Britain. It’s a fact that we actually export more to Ireland than we do to Brazil, Russia, India and China combined.
“Stability in the Irish economy and success in the Irish economy is very much in Britain’s interest.”
Mr Cameron’s comments were echoed last night by Bank of England governor Mervyn King, who said the exposure of Britains banking system to Irelands economy is by no means trivial and growth in the euro area is a very important ingredient to U.K. economic prospects.
While the direct holdings of Irish sovereign debt are not especially large, ownership of securities issued by Irish banks are bigger and of course there are wider exposures to assets comprising loans to the Irish economy more generally, King said. There are some very delicate discussions going on in Europe as we speak, King said. Its something which is relevant to concern about financial stability in the U.K., but its focused more generally on the Irish economy, then the Irish banking system and only to a relatively small extent direct exposures to Irish sovereign debt.
Chancellor of the exchequer George Osborne said the Irish crisis showed that international fears about the stability of sovereign debt had not disappeared, saying it vindicated his decision to press for fast, deep spending cuts over the next four years to abolish the UK’s annual deficit by the end of the parliament.
“There is an enormous amount of speculation about Ireland at the moment. I don’t propose to add to it . . . I would make a general observation that what is going on at the moment highlights that concerns about sovereign debt have not disappeared, and we should be grateful that, thanks to the actions of this government we have moved Britain out of the danger zone.”
The Conservative/Liberal Democrat government will face domestic pressure if it eventually has to join in an Irish bailout under rules that were agreed just days after the May general election by Labour’s Alistair Darling which could cost the UK €7 billion in loans in the Irish case alone.
Last night British sources said London was not joining the calls on Dublin to accept emergency aid immediately, adding that even if Ireland did apply, it was by no means certain the British bill would come to €7 billion.
“It is not our business to tell the Irish how to run their economy,” one source told The Irish Times.
Additional reporting Bloomberg