European shares are up slightly and the euro has climbed after Dublin’s decision to request an EU-IMF bailout.
The move comes just days after the Irish government denied it needed a multi-billion euro rescue.
Dublin will also announce a massive austerity package this week, and Britain has said it will offer Ireland a separate, direct loan.
Britain’s Chancellor of the Exchequer, George Osborne, said: “Because Britain is not part of the euro, I didn’t want to be part of the euro bailout element of this. I wanted Britain to do its bilateral commitment to Ireland, because Ireland is a close neighbour. It’s in Britain’s national interest.”
This will be the second financial bailout of an EU country in six months, after Greece. But observers warn it is too early to say if this will be enough to stop a so-called contagion effect. Fears have been expressed that Portugal could be next in line for a financial rescue.