Britain joined leading eurozone countries today to try to calm nerves over a possible European Union bail-out of Ireland.
Ireland's economic woes have been a hot topic at the G20 summit in Seoul after market jitters about a possible debt default pushed yields on Irish 10-year bonds up beyond 9%.
Chancellor George Osborne held a meeting on the fringe of the summit with his German and French counterparts today.
There had been concern in the markets over German moves to force private investors to bear a share of the burden in future bail-outs of countries in fiscal crisis.
But a joint statement released by Britain, France, Germany, Italy and Spain made clear that "any new (bail-out) mechanism would only come into effect after mid-2013 with no impact whatsoever on the current arrangements".
It is unusual for the UK to get involved in the bail-out mechanism for eurozone countries, as chancellors have previously insisted this is a matter for members of the single currency.
But Mr Osborne said today: "We should support the Irish government in the steps that it is taking."
Dublin is expected to release a deficit reduction plan in the coming weeks to rein in a deficit which has reached 32% of GDP.
Prime Minister David Cameron said: "I would applaud what the Irish government is trying to do to sort out their very difficult position with regard to their public finances."
Asked whether Ireland's economic difficulties could end up infecting the UK, he said the "key difference" was that Britain was not in the euro, allowing it the exchange rate and interest rate flexibility it needed to respond to any pressures.
The statement by the ministers effectively means that Europe will not be enforcing losses on private investors holding Irish bonds before 2013.
Finance Minister Brian Lenihan said he welcomed the solidarity shown by Ireland's EU partners and the G20.
"The clarity provided by the EU finance ministers of the G20 is most welcome," he said.
"The statement makes it clear that any potential private sector involvement in that mechanism does not apply to any outstanding debt and any programme under current instruments.
"Any new mechanism would only come into effect after mid-2013. So this would have no impact whatsoever on the current arrangements.
"Our EU partners have confirmed their full confidence in the budgetary strategy being pursued by the Government."Reuse content