Euro zone nations work to convince Ireland to ask for help

| November 17, 2010 | 0 Comments
Euro zone nations work to convince Ireland to ask for help

Yesterday’s meeting in Brussels of euro zone finance ministers concluded with failing to convince Ireland to ask for financial aid.

The Irish Government continues to reject a bailout, insisting it is fully funded until at least the middle of next year.

However, the country’s financial situation was described as “our most pressing challenge” by EU’s finance commissioner, Olli Rehn.

Mr Rehn said proposals are being drawn up for a potential bailout - should Ireland ask for help.

In the meantime, finance ministers from all the 27 European Union countries are to meet shortly to discuss the pressing matter.

In the meantime, there are fears for other euro zone nations after European Union’s statistics office, Eurostat, said Greece’s budget deficit reached a revised 15.4% of annual economic output last year – higher than the 13.6% reported in April.

The revised figure, which is almost two percentage points more than originally forecast, now makes it the largest deficit in the euro zone – even higher than Ireland’s 14.4% deficit.

In addition, speculation is mounting that Portugal may be forced to seek to an emergency rescue.

Over the last few weeks, Irish, Portuguese and Spanish Government borrowing has surged to record levels.

In particular, bond yields for Ireland, Portugal and Greece all remain high, which suggests a lack of investor confidence.

While this is not an immediate problem for Ireland, it is for Spain, which recently held an auction of Government bonds.

Meanwhile, euro zone nations are concerned that if Ireland doesn’t ask for help, the money markets will undermine Ireland even further, then turn on Portugal, Italy and Spain.

This could lead to a full-scale bailout for the euro zone, which will therefore threaten the future of the euro.

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