In These New Times

The Irish pledge on Tuesday to guarantee the country’s banking system triggered a flood of cash from businesses to Irish banks, a senior Irish stockbroker said.

More good news for Gordon as early evidence suggests that British businesses and savers are hotfooting it across the Irish sea to lodge their hard earned in Irish Banks. Time will tell, but by taking this huge risk Ireland may have safeguarded it’s banks short-term future and, at the same time, dealt a fatal blow to the British banking system and the pound.

This thought will bring a smile to a lot of Irish eyes.

LONDON (Reuters) – Britain is considering matching an Irish move to guarantee all bank deposits in response to the global credit crunch, a newspaper reported on Wednesday.

The Dublin government on Tuesday guaranteed the bank deposits of Irish banks in a bid to improve the industry’s access to international funds frozen by the crisis.

The pledge, which covers up to 400 billion euros (323 billion pounds) of liabilities, is more than twice the country’s annual gross domestic product.

The Daily Mail newspaper quoted unnamed government sources as saying the British government was considering a scheme that would match the Irish government’s guarantee to protect all bank bonds, debts and deposits.

Calling it a “drastic emergency plan” to rescue London’s financial industry, it said Prime Minister Gordon Brown had taken the unusual step of hiring investment banks to advise him on a possible bailout deal, independent of Chancellor Alistair Darling.

A spokesman for Brown declined comment.

Protection of bank deposits has become a key public concern after the government was forced to nationalise two mortgage lenders this year, Northern Rock and Bradford & Bingley.

Brown said on Tuesday the government planned to raise the guarantee for bank savings to 50,000 pounds from 35,000 pounds in a new banking law.

Asked if he would go further and copy the Irish plan, Brown told the BBC: “Let’s remember that the Irish are dealing with taxpayers’ money here. We have got to get what is right and also what is reasonable.”

He added: “I want people to know that we will do whatever is necessary, however it is necessary, to ensure the stability of the system.”

The Daily Mail said the Treasury was working on a proposal that could insure 1.9 trillion pounds of deposits in British banks. It said such a plan would carry significant risks as it could shake confidence in sterling and saddle the government with huge debts.

The Independent newspaper reported on Wednesday that senior bankers were pressing the government to guarantee bank deposits in full.

British banks fear they could lose out competitively to Irish banks that enjoy the full guarantee, the report said.

The Irish pledge on Tuesday to guarantee the country’s banking system triggered a flood of cash from businesses to Irish banks, a senior Irish stockbroker said.