Dublin repays UK £358m in interest on 2010 crisis loan

editorial image
Share this article

The UK has now been paid £358 million in interest by the Republic of Ireland following a crisis loan it gave to the country in 2010.

A total of £3.2 billion was lent by the UK to the Republic as part of an international rescue package of the country’s collapsing economy.

The latest report from the Treasury says Ireland has now paid the UK £358 million in interest since 2011.

Since June 2014 the UK has received an interest payment of around £42 million every six months.

It will be March 2021 before the bilateral loan’s term is up. The final tranche of money was paid to Ireland in September 2013.

The document said: “The Government agreed to provide a bilateral loan to Ireland because it is in the UK’s national interest that Ireland has a successful economy and a stable banking system.

“The links between our financial systems, particularly in Northern Ireland, mean that there was a strong economic case to provide financial assistance to Ireland.

“By being part of the international financial package, the UK indirectly supported the very many businesses across the UK that trade with Ireland.”

The loan was made at the same time as a bailout by the European Commission, International Monetary Fund and European Central Bank and at a time when the country’s banking system threatened to implode.

Stringent austerity conditions were attached by the three organisations, known as the Troika, and resulted in wage reductions, rising unemployment, cuts to public services and extra taxes on Irish citizens.

The Republic is one of the UK’s main export markets - at the time the loan was given it accounted for 5% of Britain’s total exports and two-fifths of Northern Ireland’s exports.

Many Irish companies are listed on the London Stock Exchange.

In late 2010 the Royal Bank of Scotland lent billions in Northern Ireland - loans which were insured by British taxpayers as RBS is a semi-nationalised bank.

If the Irish economy were to implode, that would have generated large losses for RBS and the UK taxpayer.

In 2012 Chancellor George Osborne reduced the rate of interest on the loan in line with Eurozone lenders.