Osborne: We will help our friend in need

THE chancellor yesterday said Ireland was a “friend in need” that Britain would support, likely with a direct loan that will run into billions of euros.

George Osborne said the loan would probably be in the “billions, not tens of billions”, but declined to give any further details of the package being discussed.

Britain will not charge Ireland a “punitive” rate of interest, Osborne said. “We are not seeking to make a buck out of this. We are looking to help a friend in need,” he added.

Any bilateral loan would come on top of Britain’s contribution to the €60bn European Financial Stability Mechanism (EFSM), which former chancellor Alistair Darling signed up to in May.

However, aides to the chancellor told City A.M. that Britain would cap its overall contribution at around £7bn.

If it has to pay more than expected into the EFSM, it will reduce the bilateral loan accordingly, they said.

Meanwhile, Osborne said he would oppose any attempts to top up the EFSM to “make good” on the bailout package that has been promised to Ireland, and confirmed the UK would not sign up to any future Eurozone bailout initiatives.

Britain is not a contributor to the much-larger €440bn European Financial Stability Facility.

Despite dissent on virtually all sides of the House of Commons, Osborne staunchly defended his decision to help Ireland.

He said: “We have strong economic relations with Ireland. Ireland accounts for five per cent of Britain’s total exports abroad. Indeed we export more to Ireland than to Brazil, Russia, India and China put together.”