I’d like to start this article by saying that I am not flying the flag of any political party, most leave a bad taste in the mouth as far as I am concerned, but I think Chancellor Osborne has got something right…
Ireland is being bailed out to the tune of £72 billion. It is estimated that the UK will be giving Ireland around £7 billion. I believe this is the right thing to do. For several reasons despite what many newspapers have been saying
1: Economically, and this is one of the best arguments. We will be lending this money to Ireland at a rate of about 5%. We can borrow at around 2.5%. This means that the UK, Lending 7 Billion to Ireland will make around 2.5% a year. Thats £175,000,000. Pretty nice really.
What’s that? You think Ireland will default? Not a chance. Angela Merkel recently talked about a system where countries would be able to default on bonds whilst being bailed out by other countries, but she has gone very quiet on that lately.
The countries of the Eurozone can not fail financially, it would destroy the Euro. This is why all countries which have the Euro, in my opinion will not be allowed to fail. I would argue that all Eurozone bonds should be trading at roughly equal amounts, whereas in reality Greece bond yields have to be far higher because people think they might default, but Germany, will once more foot the bill if problems arise.
The Irish, for all their faults, are one of the few countries in this world which we have a trade surplus with. This means they are one of the few countries where the value of all the things we send them is higher than all the things they send us. And that is very rare for the UK these days….
Social: Socially, Ireland is a very similar country to us, and a lot of the British see the Irish as their neighbours, and in some parts of the UK the Irish are favoured more than other regions of their own country!!!!
It’s a tough pill to swallow, but the UK will get their money back, with interest. They will also be helping out a neighbour, and a friend in need, is a friend indeed….
