In These New Times

A new paradigm for a post-imperial world

UK to earn £440m from Irish loan

Posted by seumasach on December 15, 2010

A nifty bit of work by Tory, City spiv, George “artful dodger” Osbourne. In order to bailout British banks to the tune of £143  bullion Britain contributes a measly £3.25 billion and pockets a tidy sum at 5.9% interest. Well if we ain’t just crying our heart out for poor old Ireland.

Irish Times

15th December, 2010

Chancellor of the Exchequer George Osborne said Britain will earn £440 million in interest and fees from its loan to Ireland as he sought parliamentary backing for the aid.

The estimated interest on the £3.25 billion 7.5-year loan will be 5.9 per cent for the first of the eight tranches, to be disbursed in September next year. That’s derived from the charge of 2.29 per cent above the sterling 7.5-year swap rate at the date of each disbursement and is just above the average rate of 5.8 per cent on the overall €85 billion bailout package to Ireland from the European Union and International Monetary Fund.

Mr Osborne told parliament in London that it was in the UK’s national interest to make the loan because of the UK’s trade and economic ties to Ireland. He presented a two-page bill on the loan for a second reading today.

The commitment to help Ireland has stirred opposition among some members of prime minister David Cameron’s Conservative Party as the government slashes spending to reduce Britain’s own record budget deficit.

“Our two countries are intertwined,” said Alan Johnson, the opposition Labour Party’s Treasury affairs spokesman, who said he supported the loan. “Ireland could cause significant damage to UK financial institutions.”

Ireland will draw from the €440 billion European Financial Stability Facility set up by the EU in May as part of the Greek bailout to protect the currency shared by 16 countries. European leaders will hold talks at a summit in Brussels this week on creating a permanent mechanism from 2013, when the facility expires.

The UK is also committed to a €60 billion EU bailout fund, agreed days before the coalition government was formed in May. Britain would be liable for 13 per cent should Ireland use and fail to repay the whole facility.

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