Loans to Ireland

Some have raised the issue of the UK’s loans to Ireland, made at the point of transition from Labour to Coalition in 2010.
The Coalition decided to lend money bilaterally to Ireland so it was not part of an EU scheme, and offered no precedent for the UK in future having to join Euro area bail outs.

The loan reached a total of £3.2 billion when the final drawdown was made in September 2013. The money is repayable in instalments between April 2019 and March 2021. By September 2014 the UK had received £148 million in interest payments. The interest receipts are now running at £42 million a half year, and all payments have been made on time. The interest rate is a little higher than the UK government current ten year borrowing rate.

There is no reason to suppose anything will go wrong with this loan. The Treasury expects repayment on schedule. It established no precedent. I speak as someone one who was against it at the time, as I just felt the UK had to do everything to get its own borrowing requirement down.

I remain keen to ensure the Uk does not have to pay any of the costs of the unsuccessful Euro economic policies in the states that are suffering from their position in the currency. I also wish to see the UK enjoy tax cuts and lower borrowing by ending the huge payment we make yearly to the EU under our current membership.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.

49 Comments

  1. JJE
    Posted July 26, 2015 at 5:42 am | Permalink

    You can say this doesn’t set a precedent, but just saying so doesn’t make it so. It clearly happened and the PM spoke in full support.
    It went through in November 2010 which was well into the Coalition. Sweden and Denmark also made smaller bilateral loans alongside the massive main bailout deal, so that looks co-ordinated to me with the amount of the loan proportional to the size of our economy and calculated according to an EU formula.
    We may not like it but I don’t really see why that isn’t a precedent.

  2. Old Albion
    Posted July 26, 2015 at 6:07 am | Permalink

    If the EU demand money from the (dis)UK government. Cameron will have a little bleat about it, then pay up. He’s got form………….

    • Timaction
      Posted July 26, 2015 at 10:30 am | Permalink

      Exactly. All talk and then hand over the cash. £1.7 billion surcharge, no problem. £1 billion for another Greek bail out. Of course. The form is pretend they have control and then beg at our masters instruction to try and not be humiliated.
      We demand our sovereign democracy is returned from the oppression of the EU, all supported by the legacy parties. I didn’t vote for this and have no voice.

    • bigneil
      Posted July 26, 2015 at 10:50 am | Permalink

      True. . .and . . Not Ireland, but involved . . Am I the only one who thought the recent demand from the EU was for us to be responsible for £1bn and ( eyebrow raising suspiciously ) VERY shortly after – Greece paid £1.4bn to the EU.
      The leaders of this govt can find unlimited money for anything for anywhere that is NOT to do with this country. Such a shame that they seems stuck on destroying the country and its people – to get CMD’s reward of a seat in the EU top room.

      • Richard Hobbs
        Posted July 26, 2015 at 11:49 pm | Permalink

        They don’t find the money to pay their own (expat) pensioners either!

  3. matthu
    Posted July 26, 2015 at 7:30 am | Permalink

    “There is no reason to suppose anything will go wrong with this loan. The Treasury expects repayment on schedule. “

    I simply wonder how this description compares with similar descriptions of the bank bailouts in 2008?

    Or indeed with the previous Greece bailouts by the EU?

    Can we think of any other similar assurances in history?

    Assurances over HS2? Assurances over decarbonisation? About the pound in our pocket not being affected? About various treaties being no more than a tidying up exercise?

    If there is another Euro crisis (and there will be) these loans (let’s hope they were denominated in Sterling … what – they weren’t?) will suddenly become much more difficult to service.

  4. alan jutson
    Posted July 26, 2015 at 7:34 am | Permalink

    So many Countries borrowing money.

    So many Countries lending money who borrow money.

    Even a Some Countries lending money who borrow money who need more money.

    A few Countries hopelessly in debt who have borrowed more than they can afford and are struggling to pay it back.

    A few Countries hopelessly in debt, who have borrowed more than they can afford, cannot even pay back the interest, but expect to borrow more.

    What a hopeless bunch of politicians all the above have that cannot even do simple mathematics.
    This really is failure of any sort of sensible financial policy on a grand scale.

    • A different Simon
      Posted July 26, 2015 at 8:54 pm | Permalink

      Alan ,

      I don’t agree with Owen Jones on much but he is right that the establishment maintain the status quo by limiting the scope of debate .

      They would never tolerate airing of discussion on closing down the bank of international settlement .

      In order for a country or a person to run a surplus (for an extended period of time) , somebody else must be running a deficit . It is impossible for everyone to run surpluses .

      Thus the idea that a country which is running a deficit is living beyond it’s means is very popular but false .

      If Greece was a sovereign country with it’s own floating currency it could issue it itself without borrowing it and without paying interest on it .

      The system is at fault , not politicians .

      • alan jutson
        Posted July 27, 2015 at 6:51 am | Permalink

        A d S

        “The system is at fault not politicians.”

        Really.

        So who is responsible for the system and how it operates.

        Who is responsible for the Budgets, the taxation, borrowing and spending levels.

        Who bribes the people with pie in the sky promises and their own money in order to gain power.

        Who are responsible for decisions and negotiation on recent EZ bailouts.

        All the above decided by politicians of one sort or another.

        You suggest surplus and debts should balance out, that would be true if all Countries operated in a balanced manner, with the same rules and a fixed rate of exchange, and money circulation, but that is not so.

        Pray tell me who are in such a massive surplus, that it balances out all of those Countries who are in debt.

        • A different Simon
          Posted July 27, 2015 at 11:02 am | Permalink

          I take your point from your last sentence – although countries i.e. Germany are in surplus , in aggregate for public finances it does not net out .

          We are not just talking public finances though . The rich are getting richer , much richer , and everybody else including public finances are getting poorer .

          The money is being sucked out of the system by the super rich , shadow banking fraternity and major land owners . They are the ones who are in massive surplus .

          We see obvious examples of Russian Oligarchs who were gifted the countries natural resources but cronyism capitalism is also rife here , hidden in plain view .

          Take Central London , well known minor royalty own acres of Belgravia . Rents in these areas have gone up in value primarily due in part to disproportionate expenditure of public money on infrastructure , policing over decades . Who spends the money , who decides how it is spent and for the who’s benefit ? Who gets the lions share of the rewards ?

          The failure of politicians to hold the super-rich , large landowners and banking corporations to account is what causes western countries to haemorrhage money .

          Rather than talk about this the blame is shifted onto the people at the bottom of the foodchain by exaggerating their influence and impact .

          It’s like the end stages in a game of monopoly . The slate has to be wiped clean and start again . Even the Roman’s knew this .

          • alan jutson
            Posted July 27, 2015 at 5:05 pm | Permalink

            A d S

            Simon you are talking of two different owners and uses of money.

            Government, and private wealth.

            All your example shows is that private individuals have made better decisions with regards to money management and creating wealth, than politicians, even after the politicians have taken their cut out of it (income tax, National insurance etc) and continue to do so every time it changes hands (spending) when in private ownership, through VAT etc.

            Yes agree some have gained wealth through dodgy dealings, but the vast majority of the population are law abiding and have worked hard and honestly for what they have got.

          • A different Simon
            Posted July 28, 2015 at 10:58 am | Permalink

            What have the vast majority got though ?

            Yes drinkable water and maybe a roof but their existence is merely to pay interest to mortgage lenders / rent or in the case of the poorest to act as a conduit by which money is transferred from the people in the middle to the people at the top .

            If big corporations , private equity and hedge funds own everything and charge us rent on it then it stands to reason that poverty and serfdom are guaranteed .

            You mention taxes but serious taxes on monopolies like land which rentiers make their money out of are mysteriously absent . Eg a cost should be attached to hoarding of land and so ensure efficient use/competition .

            We have examples of supermarkets owning packages of land to prevent the competition getting started .
            If they had to pay the same taxes on the vacant lot then they would have to let them go .

            The Govt is responsible for defending the realm . That should not just be against military force but also corporate force .

            You talk as if it’s a fair game . It’s not , the deck is stacked and the corporations rather than elected politicians make the rules .

  5. JoeSoap
    Posted July 26, 2015 at 7:48 am | Permalink

    It is just stupid, when they are bleating about the level of our debt, for a government to gratuitously lend like that. It shows that all the tears over tax increases are crocodile ones. Scoialism is as socialism does.

  6. Lifelogic
    Posted July 26, 2015 at 8:00 am | Permalink

    The interest rate on the loan was extremely low, well below market rates, given the risks that the UK took. This at a time when the banks (the government owned RBS in particular) were pulling back cash from perfectly sound businesses and killing jobs and growth hand over fist.

    Why on earth did Osborne and Cameron not object to this loan, especially on such generous & soft terms? This at a time when UK businesses were being hugely damaged by lack of bank lending or functional banks? The existence of this loan clearly has an effect on overall UK borrowing rates pushing them up slightly at a large cost to the country. There is also the huge opportunity costs of what could have been done (far more profitably or usefully) with the money within the UK.

    • JoeSoap
      Posted July 26, 2015 at 3:46 pm | Permalink

      Exactly. Screw the small guy, save the banks.

      • stred
        Posted July 27, 2015 at 10:21 am | Permalink

        BBC News reported 3 days ago that Treasury officials had met and emailed the Banking Regulator with regard to his decision about compensation to SMEs over misleading sales of credit rate swaps, which have been disastrous for many small businesses. It appears that compensation would have been so large that the banks lobbied hard and the politicians listened. The regulator is in a quasi judicial position and, as far as I am aware, his office is financed by the banks. Surely it must be a very serious matter for a politician to allow his officials to put pressure on a regulator and possibly deny proper compensation to citizens in order to favour the most disliked sector of big business. Nothing much seems to have followed this news. Some MPs ought to ask Mr Osborne whether he instructed these officials to put pressure on the regulator.

    • A different Simon
      Posted July 26, 2015 at 9:00 pm | Permalink

      Lifelogic ,

      It’s nice during an extended period of Zirp to be able to borrow sub 1% and lend at a minimum of 8% .

      If that is not a bank bailout I don’t know what is .

      I’ve heard figures for the cost of the bank bailout of £375m but you could probably put a one infront of that .

      They tell us we live in a capitalist society but where is the creative destruction ?

      • A different Simon
        Posted July 26, 2015 at 9:06 pm | Permalink

        These guys are operating with a safety net and we are not talking about reinsurance .

        This is moral hazard on a grand scale yet has become situation normal !

      • acorn
        Posted July 29, 2015 at 7:32 am | Permalink

        At its peak in 2008/9, the government had circa £1,500 billion in or guaranteeing Banks. The non-bank “nation debt” was about £700 billion at the time, making total Treasury debt at circa £2,1oo ish billion. Banks have been allowed to make super-normal “operating” profits to pay it down.

        The 375 number you quote is likely the £375 billion the BoE lent the APF for the QE plan, that hasn’t worked to well.

        PS. In your debate with Alan J; remember there are “real assets” (houses, cars, planes etc) and “financial assets” (government money). Only the currency issuer, the UK Treasury, can increase the level of financial assets in the economy. The private sector users of the government’s currency, decide how much they want to save and how much they want to spend.

        The amount of financial assets, government money, the private sector saves, is exactly equal to the so-called “nation debt”.

        Commercial Banks can’t increase the “net financial assets” in the private sector economy. Everything in these banks nets to zero. For every loan / asset, there is a deposit / liability.

  7. APL
    Posted July 26, 2015 at 8:42 am | Permalink

    JR: “The Coalition decided to lend money bilaterally to Ireland so it was not part of an EU scheme, ”

    But why didn’t the Irish get money from their central bank, the ECB?

  8. Bill
    Posted July 26, 2015 at 9:29 am | Permalink

    Thank you for this. The most telling figure, as far as I am concerned, is the amount made in interest payments by the Republic to the UK (£84m pa). Does not that figure scream at us: ‘do not borrow money and get the deficit down’.

  9. Bert Young
    Posted July 26, 2015 at 9:31 am | Permalink

    Ireland is different to Greece ; the improvement they have made since their crisis is notable and I don’t doubt for a moment that they will repay us – meanwhile the interest earned is very competitive .

    I fully agree that we should not be drawn into any form of economic prop up to the EZ . It is their affair . While away for the past 2 weeks , I was horrified to learn that the EU had demanded an extra payment from us immediately after the decision to keep Greece in the EZ . The pretext used was nothing short of blackmail and convinced me more than ever that the sooner we are out of the EU the better .

    Similarly the Obama nonsense that we will lose international whack if we opt out made me conclude that the sooner he is gone from the White House the better . He has lost what ever credibility he had in the USA and is no longer trusted .

  10. DaveM
    Posted July 26, 2015 at 9:32 am | Permalink

    Just saw Jeremy Corbyn on Marr. Regardless of his political leanings, I quite liked him.

    1. Honest.
    2. Principled.
    3. Convinced that what he believes is right and in the interests of his people.
    4. Selfless.
    5. Frugal.
    6. Not afraid to recognise that England and Scotland are separate countries.
    7. A genuine sense of public service.
    8. The power of independent thought.

    I won’t list David Cameron’s attributes; just read the above list and presume the absolute opposite. Never in the recent history of the Conservatives has the party been so desperately in need of a new dicta…sorry, leader.

    • alan jutson
      Posted July 26, 2015 at 3:08 pm | Permalink

      DaveM

      Yes also saw the interview.

      He argues his case very well, uses sensible language to explain his position, looks very comfortable with his views, and is very clear about his aims.

      He also answers the questions put to him, without politically correct answers or Party spin which usually means no answer at all.

      Also on the plus side (for him and his followers) he managed to show up the other three candidates by not even mentioning them.

      I can see why so many will follow his cause, but if he is successful in being elected leader then Labour can say goodbye to gaining power whilst he is in control.

      • outsider
        Posted July 26, 2015 at 5:57 pm | Permalink

        A Corbyn-led Labour party would also take a much more pragmatic view on our membership of the EU Alan. I have noticed that the treatment of Greece has crystallized Left-Wing doubts about the direction of the EU and about Jacques Delors’ sudden 1988 conversion of UK trade unions and Labour from anti-EU to fervent commitment to UK membership.

        Greece has made the EU look more like the stern bringer of austerity and the bosses’ scheme to keep wages down than the protector and promoter of workers’ rights that looked so attractive for them when Margaret Thatcher was in No 10.

        As I understand it, Mr Corbyn wants to be in a reformed EU. But he would consider camapaing for UK withdrawal in a referendum unless Mr Cameron achieves much greater reforms than he is aiming for, some of which Mr Cameron might not agree with.
        At the least, therefore, a Left-led Labour Party would much more pressure on Mr Cameron to deliver than the other mindlessly pro-EU candidates .
        And if, as seems likely, Mr Cameron does not deliver on anything the European Commission is not happy to conceded anyway, a major parliamentary party might campaign for an out vote, which in my view is essential for that to succeed.

        OK, most people would not be likely to vote for Mr Corbyn to be PM in 2020 but that is almost five years away and in any case I doubt that most Ukip voters really want Mr Farage to run the country (as opposed to removing us from the EU).

        Personally, I loathe most of Mr Corbyn’s views but he would make a viable interim Labour leader while bigger people than the other likely winners rethink how the party can promote the interests of ordinary working people today. Meanwhile he would also fulfil the democratic function of representing those who are entirely out of sympathy with Government policies.

    • JoeSoap
      Posted July 26, 2015 at 3:59 pm | Permalink

      Yes, totally he was totally devoid of bulls-it and weasel words, of the type employed by Cameron. If elected he will have problems with the media and frankly with the fact that we are part of the EU, as he will be pushing a Podemos/Syriza type agenda which might just switch us from net contributors to net takers in the EU.

      Look for him to make look an idiot the phony Cameron and his pretend EU re-negotiation.

      • Roy Grainger
        Posted July 26, 2015 at 5:55 pm | Permalink

        Yep I watched too, very impressed, can see why Labour voters like him. His policies are nonsense of course.

        On the topic of this discussion I am a bit perplexed as to why we persist in offering special treatment to Eire, even to the extent of letting their citizens vote in our general elections.

      • Roy Grainger
        Posted July 26, 2015 at 5:57 pm | Permalink

        I assume the Bennite Corbyn is anti-EU. Would be great if he won the Labour leadership then campaigned for NO.

    • Chris S
      Posted July 26, 2015 at 10:38 pm | Permalink

      He’s just deluded……………

    • David Cockburn
      Posted July 27, 2015 at 8:08 am | Permalink

      You might add:
      9. Hasn’t learned anything new since he was in a student debating society.
      10. Wrong.

  11. petermartin2001
    Posted July 26, 2015 at 9:39 am | Permalink

    It makes sense for the UK to lend to Ireland providing the terms are right. They sell the UK approximately £400 million more stuff p.a. than they buy from the UK. So they have an income in £ which they can use to pay back those ££ and pay the interest on those ££ which they borrowed in the first instance.

    It wouldn’t make any sense if the UK didn’t allow them that income. Just as it makes no sense for Germany to lend euros to Greece. Germany’s surplus sucks euros out of its trading partners. They don’t have a net income from their German trade to be able to repay those loans. Unless the Germans allow them that, as the UK allows Ireland that, they’ve no hope of ever being repaid.

  12. CHRISTOPHER HOUSTON
    Posted July 26, 2015 at 10:02 am | Permalink

    Many years ago, I think it was the FT, but there were possibly similar coverages in other papers, stated names of quite famous and wealthy British celebrities, maybe one surprisingly was a British Parliamentarian who became domiciled in Ireland. In parallel it was stated the Irish tax regime was much kinder than the British.

    It was kind of the UK to lend money on such reasonable terms to Ireland. Perhaps it would not set a precedent of bailing out EU casualty countries. However, it does set a precedent in the world of Finance of a different sort. No-one is …kind… does anyone any favours in lending money in Financial circles.

    Of course Ireland has most recently been seen by the IMF and elements of the British Parliament as allowing a tax haven to billion dollar companies who trade here and I believe Ireland has tightened its regulations now.

    (allegation removed ed)
    And for a Tory government of all governments, to show kindness to Ireland, “because the Irish are family ” as Mr Cameron and Mr Osborne stated several times, must have caused such a shock to many Irish hearts it is a wonder half of Ireland did not have cardiac arrests and the other half fall into long-term coma. Even Delaney’s Donkey must have increased his racing victory by winning a full mile race.

  13. libertarian
    Posted July 26, 2015 at 10:32 am | Permalink

    Alan Jutson

    Absolutely agree, we have quite possibly the worst politicians at national and local level that we’ve ever had. We need far far fewer politicians any way.

    They spend all day every day telling us how to do things like run our own businesses, how much rent to charge, how much salary to pay, who we are allowed to hire, what to eat, what to drink what not to smoke , what to think about other people, what we can believe or not believe, what you can sing at football matches, what items of jewellery to wear to work etc etc . Strangely they NEVER ever fix anything that they have complete control over and affects us all. The situation at the Channel Tunnel is now totally out of control. Operation Stack has been operating 20 YEARS now. As I write ( Sunday) OP Stack is in place again for the 8th time in 3 months. Junctions 8-13 of M20 are closed with more than 4,000 lorries parked up and this weekend sees 3 of Kent’s biggest outdoor events ( all destroyed financially by this ) & still they don’t have a solution. Oh and despite what the media tell you Op Stack is NOT in place because of striking French Port workers ( only 1 instance was caused by that). The rest are caused by fatalities ( 5 last week ) or gangs of immigrants in the channel tunnel trying to enter Britain. Our politicians bleat about places at top tables. OK so how come our top table partner France allows this situation to occur? Why aren’t the immigrants dealt with in France? Why aren’t they either given refugee status in France or deported back to their country of origin. Why can’t the UK & French government set up effective controls at the tunnel? Why can’t the fantastic EU politicians that tell us they know whats best for 400 million people solve a little problem like illegal immigration?

    The whole political farrago is a ponzi scheme of endless borrowing and loans to each other whilst squandering money unaccountably. This only carries on because the voters are still split left/right and squabble amongst themselves. If the voters realised that BOTH sets of their objectives could be met if taxpayers money was spent effectively, on front line services only and the effective provision of socially needed safety nets we could actually make some serious inroads into improving the quality of life for our citizens

    • alan jutson
      Posted July 26, 2015 at 7:55 pm | Permalink

      Libertarian

      Very much agree with you about the immigration problem.

      We have family members who live not far from the Channel Tunnel in Kent, they say traffic situation is absolutely chaotic all over the eastern part of Kent, and has been for several weeks now.

      Meanwhile our politicians seem to do absolutely bu..er all in bringing the inability of France to control the security situation, but still allow free movement of trade.

      I have posted before on this site that the problem is with French border control, who have failed miserably in simply letting these illegals into France in the first place.

      If France checked its own borders properly, at air, sea and land based points of entry, they could push the illegal situation back one step further from our Country, and if that was done elsewhere in the EU these illegals would not gain entry in the first place.

      The problem is the EU (as well as the Royal Navy) is rescuing these illegals from Libyan waters and bringing them into the EU, instead of turning them back, hence the trade continues.

      Lots of hand wringing no action, other than us paying millions for a new fence which will push the problem back just a few hundred yards !

      The illegals seem to be in charge, not the other way around.

      Simply crass incompetence.

  14. Ian wragg
    Posted July 26, 2015 at 11:23 am | Permalink

    I see Gideon is off to Paris to outline his negotiating position. Is there any chance we may be informed. Is it a case of seeing what scraps are available and then he can return triumphant saying he got all he wanted.
    Now Arctic ice is 40% increased and all the climate change zealots look like idiots, can we start cancelling some of these renewable subsidies and encourage some real power station building.
    I strongly object to the government borrowing on my behalf to lend to foreigners.

    • Hefner
      Posted July 26, 2015 at 4:43 pm | Permalink

      I am sorry to be a pain and repeat myself, but Christopher Hooker is again telling full/half-lies. He writes that the Arctic sea ice area has never been so extended since 1979.
      If he (and his followers on this site) had taken five minutes to check the sources, he would have reported that Arctic sea-ice is more extended by 33 percent than at his minimum minimorum in 2012 (not 1979).

      And it is very easy to check
      http://www.nsidc.org/arcticseaicenews

      Newspapers (whatever, Guardian or Telegraph) do not inform their readers: they are just comforting their readers in their biases.

      • Ted Monbiot
        Posted July 27, 2015 at 12:58 pm | Permalink

        In his excellent article Mr Booker quoted some well known alarmists who not so long ago told us confidently there would be no ice either now or in the very near future.
        Recent growth in Antarctic ice and a ressurgance in Arctic ice has proved their predictions wrong.
        This was the main point being made I thought.

    • Roy Grainger
      Posted July 26, 2015 at 6:00 pm | Permalink

      What will happen is that whatever he gets from the negotiations will be retrospectively revealed to be 100% of what he asked for.

    • fedupsoutherner
      Posted July 26, 2015 at 9:53 pm | Permalink

      Totally agree with you Ian. The subsidies should be stopped now regardless of whether the UK government will be taken to court. Let them. The costs will not be as much as the subsidies owed over 25 years. Tax them to the hilt and get some of our money back!! This whole green issue is a complete load of old tosh! The political leaders know it and we know it. Stop wasting our money.

  15. Nick
    Posted July 26, 2015 at 12:13 pm | Permalink

    So do you think the UK has been adequately compensated for the credit risk?

    • alan jutson
      Posted July 26, 2015 at 7:57 pm | Permalink

      Nick

      “….credit risk.”

      AS important.

      Will the interest rate increase with the general cost of borrowing or is it fixed at the present rate.

  16. ChrisS
    Posted July 26, 2015 at 1:54 pm | Permalink

    Britain needs some friends within the Eurozone and the loan to Ireland showed commendable solidarity with our closest neighbour at their time of need.

    I doubt that there was ever any risk of default and, if the interest rate is at least as high as that which we are paying, it will have cost us nothing. Let’s hope the Irish Government remembers our gewnerosity when Cameron needs some support over the renegotiation !

    When it comes to the referendum, people may well vote with their wallet.

    It will therefore be valuable for the No campaign to emphasise the tax reductions possible if our contributions to the EU are eliminated. A simple message could be really effective in this respect.

    I’m sure the EU will try to insist that we continue to make some contribution to the EU Budget but, given the very substantial trade advantage the EU enjoys with the UK, we could make an even stronger argument that it should be the EU that contributes to our budget in return for open trade access to the UK !

    With the increase in Income tax allowances in recent years, reducing income tax would have no affect on a significant proportion of the electorate. Far better to offer to use the money to reduce Council tax which would benefit far more voters.

    Assuming the EU makes no contribution to the UK budget, the saving of around £13.5bn should enable us to halve the amount charged for council tax across the whole UK.

    By making the reduction a fixed amount per individual household, we could see very low council tax charges for band one and two households.

    That would certainly swing some votes towards the No camp.

    • JoeSoap
      Posted July 26, 2015 at 4:04 pm | Permalink

      When you are up to your neck in debt, like the UK, you need cashflow more than you need some future income from loans out. RBS decreased its balance sheet to mend itself (though it hasn’t worked too well). I don’t think we’ll mend ourselves by lending to Eurozone countries! And anyway the ECB could have printed.

      • Chris S
        Posted July 26, 2015 at 10:34 pm | Permalink

        JoeSoap : you are forgetting something here :

        When you are a sovereign country like the UK with it’s own central bank, cash flow can never be an issue : you can simply print more currency.

        The only possible adverse effects would be a rise in inflation because of the increase in the money supply and a reduction in the exchange rate.

        Ireland could not print any more Euros and, as we all know, Greece found this out to her cost in the last two weeks.

        No Eurozone country can ever be in a position to get itself out of trouble by printing more Euros.

  17. CHRISTOPHER HOUSTON
    Posted July 26, 2015 at 6:43 pm | Permalink

    Remarkable, despite historical economic precedent demanding they should not, countries including the UK, base their loans/ repayments/policies on flighty optimistic assessments of the future. An American attitude which suits their own historic pioneering necessities. But the UK is a grown-up country.

    The Think Positive stance was of course terribly used to curb all criticism within and without Local Authorities and businesses. Constructive Criticism became the only allowable criticism which meant in practice only Eastern Bloc ineffectual “criticism ” was allowed in the Free West.

    In point of fact, given economic history, and the US economic QE…rising debt… pallid housing sector with US families having more in-work welfare benefits than a Corbyn led Labour party would tolerate, there is no reason whatsoever to anticipate future growth facilitating the UK’s repayment policies, however positive the B0E and OBR.

    As for Ireland. it has already enjoyed a “Tiger Economy” thanks to the EU policies of doling out other people’s cash hand over fist to “Deprived Areas “. Look what happened. And look what happens when other EU countries object even more to the cosy relationship of Ireland to England which allows amongst other things Irish people to take paid holidays, if they wish, here in England say on St Patricks Day. Would Greeks or Bulgarian migrants be allowed to take their national holidays here at the UK tax-payers expense? No. Nor take out various loans and credit agreements and suddenly disappear to the Republic and those loans in practice irretrievable. Even a general trace of such people is uneconomic in practice for all UK firms which, have already been ripped off.

    You were right JR to be against lending money when the UK needed to recover. The UK has in fact in regard to Ireland engaged in sub-prime lending literally on a country-wide scale. Mr Osborne should keep a rabbit’s foot in the Treasury wallet from here on in. It would be consistent too, and positive American-style, to invest British taxpayer’s money in buying Irish lottery tickets.

  18. a-tracy
    Posted July 27, 2015 at 8:30 am | Permalink

    If they were part of the Euro area why were we even asked to loan money on their behalf? Their ‘tiger economy’ hurt the UK when businesses moved to their lower taxed regime and we still have to pay up at our own citizens detriment. This is what Scottish independence would look like, they get to over-expand, not charge their students tuition fees, not pay for prescriptions, retain lots of free services that England now pays for, yet pay no more taxes and when they work in England pay no graduate tax of 9% how is this fair or justified, yet we just keep taking the punishment whilst the Irish and the Scots are now allowed to make mistakes with us keep picking up the pieces to ‘keep the peace’ with our closest neighbours who if you listen to them disrespect our beliefs and preferred representatives at every turn.

    Some peace when we are facing cuts in social care and are having to retire much later than many people’s health can cope with, which then causes productivity problems and sick pay costs on UK enterprises.

  19. Robbo
    Posted July 27, 2015 at 8:37 am | Permalink

    I supported this loan at the time as a neighbourly act, Your neighbour’s house is on fire and you lend him a hose. Not to do so would be churlish. Further the Irish were grateful and thought it a friendly act. I’m more concerned about the £9bn a year GIVEN to Northern Ireland for which the English taxpayer gets no thanks. And what about the £16.5bn a year we GIVE to Scotland and again get no thanks. Time the Scots and Ulstermen stood on their own two feet! And the Welsh too!

  20. Kenneth
    Posted July 27, 2015 at 9:32 am | Permalink

    I think the term ‘cauldron of disagreements’ sums things up very well.

    William Hague was right about the burning building. The fire is now spreading outside of the Eurozone. The good news is that we still have an exit door. Moderate and rational people will surely vote for us to get out now before it is too late.

    • Kenneth
      Posted July 27, 2015 at 9:33 am | Permalink

      Sorry, I posted in the wrong thread

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

  • John’s Books

  • Email Alerts

    You can sign up to receive John's blog posts by e-mail by entering your e-mail address in the box below.

    Enter your email address:

    Delivered by FeedBurner

    The e-mail service is powered by Google's FeedBurner service. Your information is not shared.

  • Map of Visitors

    Locations of visitors to this page