Belfast Telegraph

Call for calm over bail-out jitters

Britain has joined leading eurozone countries 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%.

UK Chancellor George Osborne held a meeting on the fringe of the summit with his German and French counterparts.

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: "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.

British 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.

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