Monday, 22 November 2010

All eyes on Irish prize

Like Ed Miliband, I'm back in Westminster after a fortnight off but the focus today is almost entirely on fast moving events across the Irish Sea

This morning's lobby was dominated by the question of how much and how soon Britain will be contributing to the bail out of the Irish economy. The negotiations are still on going in Dublin and it looks like our total could be a £7bn, taking in bilateral loans, EU and IMF aid packages.

Chancellor George Osborne explained it all pretty well on radio this morning and he'll be on his feet just after 4pm in the Commons, explaining it all again to the House.

The reasons for helping Ireland - our economic ties, the financial exposure of British banks and the symbiotic relationship of the Northern Irish economy - are all pretty easy to understand.

Our banks have £150bn of exposure to the Irish market - lent by financiers in the boomtimes and paid for us all in the hard times to come - so we have to get stuck in just to make sure that our own banks stay afloat. I've said it before, anyone who thinks the global financial crisis is over is kidding themselves.

Mark you there will be many Eurosceptic Tory MPs asking why we are involved in a Eurozone bail-out at all? This latest episode just exposes the European scar in the Tory party and there are plenty willing to pick at the scab.

There's John Redwood on television just now, presenting himself as the voice of reason, calling for a work out not a bail out with strict conditions attached. Tory Eurosceptics though would relish the chance to unravel any ties the UK has with the Eurozone.

Putting that hornet's nest in the Tory party to one side the prize for Osborne will be a rise in the levels of Irish corporation tax which could meet British corporation tax on the way down over the next few years.

Of course there are others with their eyes on the prize too and an economic crisis has just become a political one. The two Green TDs in coalition with Fianna Fail in the Irish government have just thrown the towel in and are calling for a general election. That means the ball's on the slates in Dublin with an election in the middle of January likely.

Note that Gerry Adams, the most calculating politician in the British Isles (in the geographical sense), has thrown his hat into the ring south of the border and intends to stand for the Dail.

Sinn Fein look like inevitable winners in an upcoming by-election but we can't read too much into that. While the Irish electorate may not be ready for Sinn Fein's brand of republican socialism - they like their cars and houses too much - Adams is never one to let a good crisis go to waste.

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