Ireland’s debt problems have been dealt temporary respite by a £6bn loan offering from the British government, following an emergency meeting in Belgium that discussed huge debts that could threaten the very existence of the EU.
The remarkable talks, featuring Chancellor George Osborne and other EU finance ministers, signed off an extraordinary £72bn rescue package for Ireland to try and bring their financial crisis to a halt.
There were rumours of further financial crises with reports of a potential financial disaster in Portugal, raising fears that Britain will be dragged into another rescue package.
However, Mr Osborne blocked attempts to make Britain take part in a permanent EU bailout scheme to be put in place when a temporary facility, agreed by his Labour predecessor Alistair Darling, expires in 2013.
Some £29.5bn has been earmarked to help restructure and recapitalise Ireland’s shattered banks, while £42.5bn will go to help fill the hole that guaranteeing bank debts has blown in the country’s public finances.
Former Tory Chancellor Lord Lamont said he believed the debt contagion could engulf the whole of Europe.
“This is a very serious crisis, it could bankrupt the whole EU in the end,’ he warned. “Though I think the euro will survive because this is a political project. The political class of Europe are determined – whatever the logic, whatever the problems – to make it survive. I think it will survive on this occasion, notwithstanding the street protests we’re seeing in the different countries of the EU.”
The mood in Ireland appears to be turning against the bailout, raising concerns that the country will default on its debts if the splintering coalition government there falls.