British taxpayers now face paying a bill of at least £7 billion as under a deal signed by the last Labour government, British taxpayers are liable to share in the cost of any EU bail-out.
On Monday Irish and euro zone governments will be watching the markets after Greece, which received a £94 billion bail-out in April, warned that the EU’s debt crisis was not finished yet.
Portugal has already warned that there is a “high risk” it might need economic help. If investors are unconvinced by the Irish rescue package, the euro could come under pressure while the cost of borrowing for the Dublin government could rise.
Wolfgang Schaeuble, the German finance minister, said that the deal was necessary to preserve the euro’s future.
“We are not just defending a member state but our common currency,” he said.
“Ireland has to meet strict conditions, and these will be negotiated in the coming days, so that it is not just providing financing but about ensuring that the problems are solved.”
Last week, Herman Van Rompuy, the EU president, warned that debt contagion was a “survival crisis” threatening the existence of the euro and the wider European Union.
Brian Lenihan, the Irish finance minister, refused to be drawn on the exact size of the EU-IMF loan he had requested, saying only that it was “very big” and would be “tens of billions.
IMF To Bail Out Ireland
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