BRUSSELS (MNI) – The UK is considering offering billions of pounds
of aid to debt-stricken Ireland, the Financial Times reported on
Tuesday.

“George Osborne, the UK’s chancellor, is considering billions of
pounds in British loans to help bail out Ireland, as part of an
international effort to shore up the country’s debt-laden banking
system,” the FT report said, without citing its sources.

The newspaper said that while Ireland has not made a request for
aid, George Osborne arrived in Brussels on Tuesday night amid growing
expectation that Britain will offer emergency financial funds to
Ireland.

It said UK Treasury officials wouldn’t rule out the idea that the
UK could make bilateral loans to Dublin. The report noted that an Irish
rescue effort could be easier to sell to eurosceptic Tory MPs in Britain
if it is not part of an EU bailout mechanism.

Eurozone officials confirmed late Tuesday that talks on a possible
loan deal for Ireland are intensifying and a technical mission of
officials from the European Central Bank, the European Union and the
International Monetary Fund will travel to Dublin to prepare a possible
programme. They didn’t mention any possible aid from the UK.

Ireland is planning E15 billion of cuts over the next 4 years to
brings its deficit back below the EU’s 3% limit, but the market doesn’t
believe it will be able to cut its debt burden without external help.

Slower than expected growth and the cost of bailing out its banking
system will push Ireland’s budget deficit to 32% of its GDP this year.
The Irish government has committed to getting the deficit below the EU’s
3% limit by 2014. Stripping out the banks, the deficit will be around
11.9% this year, still one of the largest in the Eurozone.

Eurozone officials – who have been meeting this evening – stressed
that debt-ridden Ireland hasn’t asked for aid yet and the talks, which
they expect to be “short” and “focused,” are only preparatory at this
stage. They wouldn’t be drawn on the size of the aid deal under
discussion or the timing of such a deal.

On Wednesday the Eurozone finance ministers will be joined by their
counterparts from the remaining 11 EU countries that aren’t in the
Eurozone for a second set of talks which will undoubtedly focus on
Ireland’s debt woes.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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