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David Heath MP Considers The Decision to Assist Ireland

Wednesday 1 December 2010, 17:52
By David Heath

David Heath, MPI'm not sure that it will be universally popular in the Republic of Ireland that they should be beholden today to the English heir to the baronetcy of Ballentaylor in County Tipperary and Ballylemon in County Waterford. However, in the extraordinarily parlous state that they find themselves, the decision of George Osborne, the Chancellor of the Exchequer (for it is he) to contribute United Kingdom funding to their bail-out will nevertheless be welcome.

The decision to assist Ireland has met with a mixed reception on this side of the Celtic sea. Many are asking how it is that, when we face such huge economic problems ourselves, evidenced by the austerity measures which we are quite properly taking, we can even conceive of offering a hand of generosity to our neighbours. Others point out Ireland is a country within the euro-zone, which uses the common currency, and that it must surely be for fellow euro-zone countries to help them out of their present difficulties rather than the UK, which of course is not. And there are some who simply point to the fact that we have already bailed out our own banking industry, to the tune of eye-wateringly huge amounts, and there is scant sympathy for yet more bankers who have made a mess of things and now expect help from the hard-pressed British taxpayer when, in this instance, they are not even British.

And yet all parties in Westminster agree that this needs to be done. Why? Frankly, naked self-interest on the part of our country. The effects of not doing so are immeasurably worse, while if the moves to secure the Irish economy are successful we shall be one of the chief beneficiaries. The fact is that Ireland is one of our biggest trading partners, and of course the only one we share a land border with. Trade with Ireland is greater than with China, India and Brazil put together. We need them to be financially stable in order that they can continue to buy our goods and help maintain our exports and our profitability. Added to that, many British financial institutions have very considerable investment in Irish banks. If they fail, then so do British businesses. And, particularly in Northern Ireland but also in other parts of the UK, many individual people and companies use Irish banks. A crash would put a lot of British livelihoods in jeopardy.

Of course, the point about the euro is a genuine one, and the euro-zone countries will foot a greater part of the bill, despite the former chancellor signing us up to a stabilising mechanism just two days before the new government came into office. Irish failure will put greater strain on other weaker economies such as Portugal and Greece, and further destabilise the currency. As someone who, unusually for my party, has always been deeply sceptical about many aspects of European economic union, I could with some justification say I told you so, that the strains of a common interest rate inevitably put pressure on the weakest parts of the currency area.

Can we afford it? No, but we certainly can't afford not to help. If a neighbour's house is on fire, you don't refuse to lend them your phone to call the fire brigade because you're having difficulties paying your quarterly bill. The fact is, it'll be your house next. Over the last six months Britain has restored the confidence of the international money markets in our credit-worthiness. That has not been easy, and it's involved difficult decisions. But we've done it, and as the Chancellor said this week, that means we can now be part of the solution, not part of the problem.

A constituent wrote to me to say that the problem with the Irish was their decision a month or so ago to distribute free cheese. I think I can confidently say that their present difficulties go way beyond excessive dairy-product generosity!


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