It is in Britain’s national interest to commit billions of pounds to help bail out the Irish economy, Chancellor George Osborne has insisted.
He said the UK is making a separate bi-lateral contribution to the rescue package to reflect the fact that it is not in the euro, and confirmed Britain’s total exposure is “around” £7 billion.
The Irish Government confirmed on Sunday night it was seeking the bailout funds and talks are under way to confirm details of the package negotiated with the EU and the International Monetary Fund. The UK has also offered a separate loan.
Critics of the British part in the bailout claim UK taxpayers are being asked to save the euro, but Mr Osborne said bluntly: “‘I told you so’ is not much of an economic policy.”
Mr Osborne told BBC Radio 4’s Today programme: “What we have committed to do is to be partners, as shareholders in the International Monetary Fund, in an international rescue of the Irish economy. But we have also made a commitment to consider a bi-lateral loan that reflects the fact we are not part of the euro and don’t want to be part of the euro.
“Ireland is our very closest economic neighbour. I judged it to be in our national interest to be part of the international efforts to help the Irish.”
Asked to confirm the £7 billion figure, Mr Osborne replied: “It’s around that. It’s in the billions, not the tens of billions.”
But the move was criticised by a leading think-tank which said the British taxpayer should not “cough up” to help Ireland, while there was also opposition from Tory eurosceptic MPs.
Sam Bowman, head of research at the Adam Smith Institute, said: “The proposed bailout for Ireland is a bad deal for the UK. Bailing out Ireland now would undo much of the benefits that Britain has yielded from keeping the pound and would make a mockery of the spending cuts announced by the coalition last month.
Conservative MP for Clacton Douglas Carswell told the Today programme: “If we are going to pay to solve this crisis we should be helping to pay Ireland to quit the euro. Ireland’s misery is only going to end when it has its own currency again. At a time of austerity, again we are paying vast sums to the European Union.”