Britain’s share of the Ireland bail out is reported to be £7 billion. Let’s just remind ourselves of what £7 billion means.
Seven billion pounds happens to be the total saving that would be made by all the welfare cuts put together. You know: the cuts that the BBC, the Guardian and the Labour Party insist will destroy social security. The cuts that Tristram Hunt says will mean a return to the Victorian workhouse. The cuts that John Cruddas says will drive a million people from their homes. The cuts that Polly Toynbee calls a final solution to the poor.
So now we know: every penny saved by these cuts will go to prop up the euro. To put it another way, at a time when Britain’s public sector debt stands at £850 billion, we are borrowing a further £7 billion to send to Ireland.
Ought we to help the Irish? Yes: they are our neighbours and our allies, our suppliers and our customers, our friends and, in many cases, our relatives. But we don’t help them by keeping them in the euro. Ireland is in this mess because of the single currency, and will stay in this mess until it leaves. If we wanted to offer Ireland practical assistance, we would help them out of the euro, by allowing their debts to be denominated in sterling (see here).
It’s true that some British banks are exposed in Ireland, but the interests of an international bank which happens to have its head office in London are not synonymous with those of the United Kingdom. And even if they were, it must surely by now be obvious that bailing out banks is a mistake.
In any case, it is far from clear that this bail-out will settle the euro. After all, as John Redwood points out, Eurocrats claimed that the Greek rescue package would end the crisis; yet, seven months on, here we are again.
“’I told you’ so is not an economic policy,” says the Chancellor of the Exchequer, perhaps in response to such articles as this one. True. But we Eurosceptics aren’t gloating for the sake of it. (“If there’s one thing I can’t stand”, a Euro-integrationist friend told me just now, “it’s people being wise during the event”). No, the reason we are rehearsing our arguments is that we want to prevent the same errors being repeated. When the euro was launched, we predicted that euro interest rates and exchange rates would be especially harmful to Ireland because, like the UK, it diverged cyclically and structurally from the euro-zone mean. That problem hasn’t been resolved, and won’t be resolved until Ireland is able to suit its monetary policy to its own needs. In the mean time, we are throwing bad money after bad.