UK approves 3.8bn euro loan deal
Published 15/12/2010 | 15:12
Britain has approved a loan of up to 3.8 billion euro to bail out the Irish economy after legislation was rushed through the UK parliament.
Chancellor George Osborne said helping Ireland recover from the banking crisis is "overwhelmingly" in the interest of British taxpayers.
Mr Osborne said: "People ask, of course, why are we extending the loan to Ireland? We are doing this because it is overwhelmingly in our national interest that we have a strong Irish economy and a stable banking system.
"It is not just about the Irish economy and Irish jobs, it is about the British economy and British jobs.
"A loan does not add to our deficit and any increase in borrowing is matched of course by the commitment of the Irish to repay with interest."
Mr Osborne added: "Ireland is the fifth largest market for British exporters, accounts for 5% of our total exports abroad... every man, woman and child in Ireland spends on average £3,600 (4,216 euro) a year on British goods."
The loan will be split into eight payments, with the first available in September 2011.
The interest rate on the first tranche would be approximately 5.9%, with each section of the loan on a seven-and-a-half year term.
The rate will be fixed for each tranche of the loan at 2.29 percentage points above the sterling seven-and-a-half year swap rate at the time.
The Chancellor set out two conditions for the loan: both the IMF and EU must be satisfied that Ireland is complying with the agreed restructuring plan and that there are no amendments to the plan that would have a "material adverse financial impact on the UK operations of Anglo Irish Bank, Allied Irish Banks and the Bank of Ireland".