Should it be needed, a European bailout for Ireland is going to give George Osborne plenty to think about. For while Ireland is a member of the European single currency, the bill for its rescue would be shared out among all European Union nations, not just those in the eurozone. Assuming that Ireland eventually asks for the equivalent of £50bn, as the markets now expect, the the British Chancellor would be required to sign a cheque for about £7bn.
It will not just be the Tory eurosceptics who will baulk at Mr Osborne doing so, even if the money would eventually be repaid. For one thing, the European agreement paving the way for this sort of bailout was reached at a rather tricky moment. Check out the paperwork and you will find that the arrangement was signed off by the former chancellor, AlistairDarling, four days after Labour lost the election in May (Mr Osborne was still busy chatting up his Liberal Democrat colleagues). It's not the strongest of mandates from British taxpayers for handing over so much of their money.
The second issue is even thornier. One reason why thepublic finances that Mr Osborne has inherited are in such a poor state is that a number of companies that used to be resident for tax here no longer are. And guess where the likes of WPP and Shire have moved, lured by a 12.5 per cent rate of corporation tax? Batt O'Keeffe, the Irish commerce minister, who was in London over the weekend, told guests at an Irish embassy dinner that his country's corporation tax rate would be left untouched by the austerity budget later this month.
Now, you can understand the Irish position. Their low level of corporation tax has been instrumental in attracting foreign investors to the country – foreign direct investment was down 30 per cent in the OECD last year, but only 4 per cent in Ireland – bringing much-needed jobs for those who have been emigrating in droves, as well as new tax revenue.
Still, it hardly seems reasonable now to ask British taxpayers – or those in other countries which have lost corporate citizens – to shell out to save a country that has been fighting a price war on tax in this way. At least, not without the Irish agreeing to raise their corporation tax rate after all.
Did the BBC jump the bailout gun?
If the BBC was your primary news source over the weekend, thesurprising thing about the Irish situation today may be that a bailout has not yet been agreed. Despite repeated denials from the Irish government – from the Prime Minister downwards – every BBC news bulletin on television and radio featured the claim that talks between Ireland and the European Union over a bailout had begun.
It is not entirely impossible to reconcile the contradiction. The Irish insist no formal talks have taken place and that they intend to weather the storm alone. Still, it would be strange if there had been no contact at all with Brussels. This is not a process that will go from zero to 100mph in a split second – the Irish must have at least had some "what if" conversations.
Still, the BBC's coverage gave the impression of much stronger contact – and carried the Irish denials with little prominence. It is a dangerous area for the media – newspapers such as this one included. Reporting on a country whose finances are sliding out of control is both responsible and necessary, but precipitating an acceleration in the rate of decline by fuelling the speculation with over-inflated claims is neither.
These situations are a minefield for conscientious journalists. We saw the same issue raised during the credit crisis, when reporters doing their jobs by asking perfectly rational questions of banks in obvious difficulty were accused of driving those institutions further towards disaster.
In the end, it comes down to tone. In my view, the BBC's reporting on the Irish situation veered a little too far down the sensationalist line. The consensus may be that Ireland will be forced to seek help, but so far it rejects all suggestions that it has already done so. And since the facts of the matter are that Ireland does not need to raise more money until the spring – and that it has a budget this month with which it hopes to convince the markets of its ability to cope – there is no reason to think its ministers are telling bare-faced lies.
Canada's failure to keep its word
Stephen Harper, the Prime Minister of Canada, had barely stepped off the plane home from the G20 summit in Korea when BHP Billiton said it was withdrawing its $40bn bid for Potash Corporation. Still, Mr Harper will have been expecting the development: though he signed up to the same pledges as everyone else in Seoul regarding protectionism – not to indulge in it, that is – once the Canadian government blocked the PotashCorp deal, BHP had little option but to walk away.
The list of sweeteners BHP dangled in front of Canada as it sought to win approval was a lengthy one: everything from millions of dollars of infrastructure investments to a promise to waive tax savings it would have been due had the deal gone through. All to no avail: after a concerted campaign in Potash's home state of Saskatchewan, which was taken up nationally, Mr Harper's government made the nakedly political decision to say no to BHP.
Do as we say and not as we do, in other words. Mr Harper should note that the government in Australia, where BHP is mostly based, has cleared the way for Canada's Agrium to buy local concern AWB in the same sector as Potash, albeit in a much smaller deal. He should not expect Canada's businesses to be able to take advantage of other countries' more liberal foreign investment regimes for much longer. And, as everyone plays tit-for-tat, free trade and the global economy will suffer.Reuse content