Euro chancellors calm nerves over Irish bailout reports
Published 12/11/2010 | 10:19
Leading eurozone countries today moved to calm nerves over a possible European Union bailout of Ireland.
Dublin has 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 9pc.
UK 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 bailouts of countries in fiscal crisis.
But a joint statement released by Britain, France, Germany, Italy and Spain made clear that "any new (bailout) 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 bailout mechanism for eurozone countries, as chancellors have previously insisted this is a matter for members of the single currency.
But Mr Osborne said: "We should support the Irish government in the steps that it is taking."
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."