Sean O'Grady: A bailout is on the way, if the markets are to be believed

Share
Related Topics

When it comes to bewildering financial crises it is usually best to start with the crisp wisdom of Nouriel Roubini, the man who called the credit crunch right. Mr Roubini said this week, bluntly, that Ireland is "on a path to near or complete insolvency". In response, Irish ministers bleat that "we're fully funded until mid-2011". Big deal. If you'd lent someone money to buy a house and they'd said that they were OK for cash until next summer, but after that things might get a bit hairy, how reassured would you be?

So that is why the big powers in the European Union are determined to bail Ireland out sooner rather than later. The experts flying to Dublin are going to be there for longer than one of the famous weekend breaks that can be so enjoyably spent in the friendly bars of the capital, but they will be expected to get on with things and avoid the Guinness. Christine Lagarde, the French Finance Minister, gave them "a matter of days". The fact that the euro and Irish government bonds are stabilising suggests that the markets also expect this to be sorted out rapidly, and that Ireland will get its bailout whether it wants it or not.

George Osborne is right to chip in the £8bn or so that is the UK's share of the bailout (or "bank restructuring plan", as we may have to term it). We cannot risk another meltdown of consumer and business confidence on the scale of the ones that followed the Greek crisis in May.

If households and businesses across Europe slash their spending and investment plans again, then what recovery we have seen will be in jeopardy. For it bears repeating that the European Union is our largest trading partner by far, a vital source of investment and with a financial system intimately linked to ours.

The British banks have big exposures to Ireland. So do others across Europe. If they suffer more bad debts and losses the effects will be felt right across the continent, just as they were with Greece. And if the contagion spreads to Portugal and, even worse, Spain then the euro itself could be destroyed.

Ireland may be salvageable, but at a surprisingly colossal cost of €80bn to €100bn, a big chunk of the €750bn rescue fund, and a big bill for such a little nation.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Volunteer your expertise as Trustee for The Society of Experimental Biology

Unpaid Voluntary Position : Reach Volunteering: Promising volunteer Trustee op...

Email Designer

£30000 - £35000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Psychology Teacher

£110 - £130 per hour: Randstad Education Reading: Psychology Teacher needed fo...

Food Technology Teacher

£85 - £120 per day: Randstad Education Cheshire: Randstad Education are curren...

Day In a Page

Read Next
London's New Year's Eve fireworks event is going to be ticketed this year for the first time at £10 a head  

London’s far too exclusive already, so don’t start charging people for the New Year’s Eve fireworks

Mary Dejevsky
So far Ebola has caused 2,600 fatalities and infected more than 5,300 people  

To stop Ebola killing thousands more, we need doctors who are willing to put their lives on the line

Peter Popham
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week