Unsurprisingly perhaps there have been more than a few eyebrows raised in British political circles at the decision by an apparently cash strapped UK Government to loan the even more cash strapped Irish Government almost £7 billion. This is despite the fact that Britain is not a member of the Euro zone, and unlike other countries that have the Euro as their currency is under absolutely no obligation to bail out the collapsed Irish banks.
The reason for the British loan is officially that Ireland remains one of Britain’s main trading partners. Ireland is probably the second main trading partner of Northern Ireland, which forms part of the United Kingdom.
But this also makes Britain a potential victim of the single European currency, which was itself born more out of political than economic thinking. While it may vindicate many of us who were opposed to Britain joining a currency union, which brought together so many different countries with divergent growth and interests rates, vindication isn’t much use if as seems likely the British economy suffers disproportionately because of the actions of others.
Courtesy of BNP Paribas, just who is exposed to Ireland and by how much: