Ireland

Monday

David Blackburn

Setting the scene for Osborne’s speech

George Osborne will make a brief statement to the house this afternoon, responding to the Office for Budget Responsibility’s revised growth forecasts. Reuters reports: ‘As expected, the Office for Budget Responsibility raised its 2010 growth forecast to 1.8 percent from its 1.2 percent June forecast to factor in a surprisingly strong performance in the middle of the year.’ The upgrade fuels Osborne’s positive narrative: the coalition pulled Britain from the abyss and international confidence in Britain’s economy is growing. These forecasts vindicate the government’s ‘cut with care’ strategy. Concrete savings are now being made and they enable the Chancellor to announce that public sector net borrowing will fall. Reuters again:

Saturday

The Spectator

Portrait of the week | 27 November 2010

Britain is to lend Ireland up to £9 billion. Home Britain is to lend Ireland up to £9 billion. ‘Ireland is a friend in need,’ George Osborne, the Chancellor of the Exchequer told the House of Commons, ‘and it is in our national interest that we should be prepared to help them at this difficult time.’ British loans could be made via three routes: bilaterally through the European Union; through an agreement under the European Financial Stabilisation Mechanism; and through the International Monetary Fund. Theresa May, the Home Secretary, said that the number of workers coming from outside the European Union would be capped at 43,000, about 5,600 fewer than last year’s

Daniel Korski

A more German Europe?

Timothy Garton Ash asked an important question in the Guardian recenty – is Europe becoming more German? Or, to put it more accurately, does the EU have to become more German to survive? “If the eurozone falls apart, it will be because Germany did not do enough to save it. If the eurozone is saved, it will be thanks to Germany. This is the greatest challenge to German statecraft since the country was peacefully united 20 years ago.” “Yet here is another horn of Germany’s dilemma. For half a century, German politicians have repeated, like a mantra, Thomas Mann’s call for “a European Germany, not a German Europe”. It was in

Hugo Rifkind Hugo Rifkind

I no longer understand what ‘Ireland’ means

The defining commentary of this on-going financial crisis, for me, came from Gerald Hill of the Midlands, in a letter to the Times in March 2009. ‘Sir,’ he wrote, ‘I can now understand the term “quantitative easing” but realise I no longer understand the meaning of the word “money”.’ I’m with Gerald. Take the IMF and EU bailout to Ireland, intended to calm market fears over that country’s debt crisis. I understand ‘IMF’ and I understand ‘EU’. I understand ‘bailout’ and I understand what a ‘debt crisis’ is, and why this particular one has happened. I also, pretty much, understand ‘the markets’, even if I do struggle to grasp why

Daniel Hannan

Politics: The right way to help Ireland

Why is Britain committing £7 billion to a bailout which will trap Ireland in its present discontents? Would you trust an economic forecaster who had recently said this? The euro has done more to enforce budgetary discipline in the rest of Europe than any number of exhortations from the IMF or the OECD. If we remain outside the euro, we will simply continue to subside into a position of relative poverty and inefficiency compared to our more prosperous European neighbours. Or this: The euro has already provided great internal stability to the eurozone. Or this: If we get rid of sterling and adopt the euro, we will also get rid of sterling

Friday

Daniel Korski

Iberian blues

I’m finishing a two-day trip to Spain and am about to board a plane, just as the bond markets turn their attention to the Iberian Peninsula. As James wrote yesterday, the gap between Spanish 10-year government bonds and those of Germany has widened to as much as 2.59 percentage points – the biggest gap since the introduction of the euro. For its part, the Portuguese government said it was under no pressure from the European Central Bank or other Eurozone member-states to accept financial aid to ease its debt and deficit problems. That sounds like the noise before the defeat. Portugal was brought to a halt yesterday by a strike

Thursday

James Forsyth

Why Spain matters to Britain

So far Ireland and Greece have been bailed out with relative ease. If Portugal required external assistance, Europe could run to that too. But bailing out Spain would be another matter entirely. As The New York Times points out today, the Spanish economy is twice as big as the Irish, Greek and Portuguese ones combined. Spain’s situation is not yet critical. But as the NYT piece sets out very clearly, there are some extremely worrying signs. The gap between Spanish and German gilt yields is now at the biggest point it has been since the introduction of the euro. Spanish banks are also heavily exposed to Portuguese debt. Compounding these

Tuesday

Alex Massie

The End of the Party?

Following this post on Fianna Fail, a Dublin correspondent cautions against underestimating the stubbornness of their hold upon the people: Fianna Fail will rise again. For two reasons: i) Fine Gael and Labour may need the support of lots of other parties to get anything done. The scope for internal disagreement is immense. It is likely that they will lose popular support very quickly if they preside over savage cuts, which they will have to do; ii) For those of us old enough to remember, Fianna Fail acted like thugs in opposition. They opposed everything (including the Anglo-Irish Agreement) and whipped up popular hysteria against the government over the smallest

Monday

David Blackburn

Cowen will seek a dissolution next year

There has been much consternation and intrigue swirling around both Dublin and Westminster this afternoon about the near-collapse of the governing coalition in Ireland. The Greens, who support Brian Cowen’s Fianna Fáil-led government, pulled out; seeking a dissolution in the hope that it might save their skins from the fate that is likely (though not certain) to befall Fianna Fáil. If the government had collapsed, then IMF would have postponed the bailout. At least now Cowen can formulate a monetary plan, hopefully under the oversight of Ireland’s international creditors, to free the country from its current extremis.   

Alex Massie Alex Massie

A Christmas Present for George Osborne

You can get yours here. In passing, let’s observe that Osborne is right to offer the Irish whatever assistance he can. Not because of economics or even politics but because it’s the right thing to do. Friends help friends and that’s about all that really need be said on the matter. [Via Joe Wiesenthal]

Alex Massie Alex Massie

The End of the Party

You’d never guess that Brian Cowen and Brian Lenihan are members of Fianna Fail, would you? Oh, you would? Fancy that. Grotesque. Unbelievable. Bizarre. Unprecedented. Ireland has known crises before, many of them extremely serious. But the GUBU days now seem the stuff of comic opera when set beside the battering Ireland has taken these past few weeks and months. The game is up and all that’s left is the reckoning. Today the Green party pulled the plug on the coalition in Dublin. The Greens may not fare well in this poll but they deserve some modest amount of praise for recognising, as Fianna Fail patently did not, that an

David Blackburn

Ireland’s crisis is the fault of Fianna Fáil, not just the euro

In all likelihood, George Osborne will rise this afternoon to groans if not jeers. Britain looks set to lend Ireland £7bn as part of multilateral and bilateral bailouts. Many, particularly the Eurosceptic right, question our involvement, given our straitened financial circumstances and the apparent fact that Britain is sustaining the eurozone’s monetary and debt union, and will have to borrow to do so.     George Osborne has been adamant throughout: Ireland is too important to Britain’s recovery to risk collapse – British and Irish banks are closely linked, debts and borrowing are often co-dependent, trade is very profitable. That the bailout should strengthen the euro is a natural consequence of Ireland

Sunday

Fraser Nelson

The death knell for the Euro?

Are we witnessing the start of a very long death scene for the Euro? Asked if the Euro will survive, William Hague replied simply: “who knows?”. The new president, Herman Von Rompuy, has said that the Euro faces an “existential test”. We are looking at the very real prospect of the Euro’s collapse. And that “if we don’t survive with the eurozone, we will not survive with the European Union”. This would, by necessity, require a new treaty – and give Britain an unprecedented opportunity to renegotiate its membership on terms the public regard as acceptable. In my News of the World column today, I say (£) that this presents Cameron

Thursday

Mats Persson

Britain may not be able to avoid bailing out the Irish

This morning, it sounds as though Ireland has finally buckled to demands that they accept a bailout from the EU. Their central bank governor, Patrick Honohan, has said that he expects a “very substantal loan” from Europe – although the details, and debtees, are yet to be clarified. In the UK, of course, backbench MPs and others have been quick to condemn any move which would force British taxpayers to cough up cash under the EU’s various bail-out arrangements. Only problem is: the UK may not have a choice. The part of the eurozone bail-out package which Britain could be underwriting to the tune of £6-7 billion – the so-called

Wednesday

Alex Massie

Blaiming the Euro for Irish Woes

On the other hand, Philippe Legrain makes the case that too much blame is being apportioned (perhaps opportunistically) to the euro and not enough is being fixed to the Irish government: The problem is not that savings flowed from Germany to Europe’s periphery. It is that they funded property bubbles rather than productive investment. But the blame for that lies with herd-like investors, flawed banks and foolish governments, not the euro. After all, America, Britain, Iceland and other non-euro countries all had huge property bubbles too. Granted, joining the euro did slash Irish interest rates, creating cheap borrowing that fuelled the boom. But at a macro level the Irish government

Matthew Sinclair

The British taxpayer should not be bailing out Ireland

Everyone is talking about the royal wedding today.  It will be a great occasion but the public finances are tight and people are already asking about the cost.  There is a bigger issue for British taxpayers, though.  Our politicians have arranged for them to get hitched to the bride from hell: the ongoing fiscal disaster in the eurozone.   Under current plans it is reported that we could be liable for up to £7 billion in any Irish bailout.  At the TaxPayers’ Alliance, we have just this morning started a petition against British taxpayers’ money being put at risk for a euro-bailout of Ireland; you can sign it here.  

Alex Massie Alex Massie

To Solve The Irish Question, Ireland Must First Admit there Is a Question

Alas, poor Hibernia. According to RTE, Brian Cowen Denies Any Bailout Talks. The rest of the world is not so easily fooled, however. These may be “technical” discussions but they’re not discussing the finer points of hurling, are they? Among the more creative solutions to Ireland’s predicament: rejoin sterling. According to Mark Reckless, Tory MP for Rochester: Every MP I have spoken to says they would be happy for Ireland to have a guaranteed seat on the Bank of England’s monetary policy committee. This would mean that, unlike before 1979, Ireland as a sovereign country would have a proper say in setting sterling interest rates. When we raised the idea

Peter Hoskin

Sovereignty, and the loss of it

The superb Slugger O’Toole blog highlights what is certainly the most resonant quote if the day: “When you borrow, you lose a little bit of your sovereignty, no matter who you borrow from.” Those words were uttered by the Irish finance minister Brian Lenihan this morning, and they capture his country’s grisly predicament perfectly. The Irish government has been fighting the European attempt to bail them out because they believe, quite understandably, that it would mean a final handover of control to Brussels and Berlin. But their loose economic policy – built on debt, and structured around a stubborn currency – has already seen them lose control to the point

Monday

Alex Massie

Another Irish Loser: Alex Salmond

There are precious few heroes in Ireland today and no gods either. But not all the losers are Irish either. Some are Scottish. Chief among them, Alex Salmond and the Scottish National Party. Not because an independent Scotland would necessarily have been destroyed by the financial tsunami that swept the globe (though, to put it mildly, it would have been “difficult” to cope and might well have required a humiliating begging-trip to London) but because an independent Scotland would have made some of the same mistakes and unfortunate assumptions that have helped cripple poor Hibernia. Europe, you see, was an important part of the SNP’s slow rise to power. At

Peter Hoskin

Ireland’s nightmare becomes Europe’s problem

“We certainly haven’t looked to Europe.” That was the message spilling from the mouths of Irish Cabinet ministers last night – but, as Alex suggested in a superb post on the matter this morning, their utterances may come to naught. After all, Europe has certainly looked to Ireland – and it doesn’t like what it sees. Already, Brussels’ moneymen are urging a bailout on the country, and Ireland’s moneymen are thought to be in “technical discussions” about how that might work. The upshot is that a financial intervention from Europe is now considerably more likely than not. And with that come European demands over how Ireland should manage its public