UK 'may be liable for £6bn of Irish debt'

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The Independent Online

British taxpayers could be liable for up to £6 billion of Irish debt under a potential rescue package for the Republic's stricken economy, it emerged today.

Downing Street said the UK was responsible for 12% of a €60 billion (£50.94bn) stability mechanism that might be used in a bid to restore confidence in the Irish economy.

The European Financial Stability Mechanism was signed up to by the former Labour government in the aftermath of the Greek debt crisis earlier this year.

While it does not require upfront investment, all EU members - not just eurozone countries - are responsible for a share of the guarantees made to underwrite a struggling nation's debts.

Ireland has not submitted any request for help so far but its government is in talks with other EU leaders about its position.

EU chiefs meeting in Brussels tomorrow are desperate to quell market fears - which are affecting other indebted EU countries - that Ireland may default on its debts.

It is thought that Dublin may require help from the pan-EU European Financial Stability Mechanism as well as a much larger fund which is the responsibility of eurozone countries only.

Prime Minister David Cameron's spokesman said today that Britain was responsible for 12% of the European Financial Stability Mechanism.

He added: "Clearly, we have a very open economy and therefore stability in other countries - or instability in other countries - has an impact in the UK."

Mr Cameron faced a backlash from Tory MPs angry at any suggestion that British money should be used to bail out Ireland.

The Prime Minister is already under fire from eurosceptics for failing to ensure a freeze in the EU's budget next year.

Bill Cash, chairman of the European Scrutiny Committee, told London's Evening Standard newspaper today: "Not a penny of British taxpayers' money should go to bail out Ireland."

Another Tory MP, Chris Heaton-Harris, added: "We have had guarantees in the past that the UK taxpayer would not bail out Greece and other eurozone countries."