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Irish euro support "very probable"

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Irish euro support "very probable"


From the G20 meeting in Seoul, the big euro zone countries have expressed solidarity with Ireland, and the European authorities are said to be discussing “very probable” swift financial support.

Investors with interests in Ireland have been worrying that new European Union rules currently under discussion will require them to take on heavier losses in case of a bailout. But finance ministers from Germany, France, the UK, Italy and Spain together said the possible new mechanism would take effect only after mid-2013 and “does not apply to any outstanding debt.”

Analyst Karel Lannoo linked a recent EU declaration with the current buzz: “We have seen the spreads increasing for the countries like Greece, Portugal and Ireland immediately after the [October]summit. And I think most investment banks have circulated notes to their clients saying ‘this is the conclusion of the Council: we will have a permanent debt restructuring mechanism’, but, in addition, the private sector will have to participate in it. And then everybody was panicking.”

Six months after a bailout of Greece, the cost of borrowing for the debt-burdened former ‘Celtic Tiger’ topped nine percent on Thursday, then easing back closer to eight percent. Ireland’s deficit is 32 percent of its GDP.

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