Ireland bail-out: British banks hit as Irish rescue deal falters
British banks lost billions of pounds in value yesterday after the Irish bail-out was thrown into jeopardy over concerns that the country’s government might collapse before a rescue deal can be agreed.
By Robert Winnett, Bruno Waterfield and James Kirkup
22 Nov 2010
The share prices of Royal Bank of Scotland and Lloyds fell sharply as stock markets took fright at the political chaos engulfing Dublin.
It had been hoped that the £70 billion bail-out agreed between Ireland, the European Union and International Monetary Fund would ease investors’ fears over the eurozone economies.
But within hours of the Irish government admitting it needed help, the Green party – on whom Prime Minister Brian Cowen relies for support – called for a general election by the end of January.The suggestion prompted a fall in the value of the London stock exchange and the euro and a rise in the cost of borrowing for both the Irish and Spanish governments. The head of the eurozone warned that “crazy” market speculators could turn on Portugal and Spain next.