Billions for Irish banks

Ireland has edged closer to accepting a bailout channelled through its banks as senior figures admitted for the first time that an international loan running into "tens of billions" would be needed to calm economic jitters engulfing Europe.

European Union and International Monetary Fund (IMF) negotiators who inspected the country's books said reinforcements would be needed to finalise a deal, so a team of IMF experts went to Dublin to work out the details of the banking sector loan. The talks, which focused on measures to "support financial stability", completed one of the most dramatic weeks in Ireland's economic history.

The Irish Government hopes brokering a bailout channelled through its banks, which have seen huge withdrawals by nervous depositors since April, will be enough to stabilise the markets. They also hope it will put an end to the threat of having an embarrassing bailout forced on the debt-laden state itself.

In the clearest admission to date that a huge cash injection was on the way to prevent Irish banks from failing, Patrick Honohan, governor of the Irish central bank, said he expected a package worth "tens of billions" of euros to emerge from the talks in the form of a "substantial loan".

British Prime Minister David Cameron has left open the possibility of a bilateral loan from Britain to ease Ireland's problems should the EU/IMF plan fail. The Chancellor, George Osborne, has already pledged British participation in any deal despite the fact any such assistance could be politically explosive.

The atmosphere in Dublin was downbeat, with many workers simply incredulous at how quickly the country, which was lauded just a few years ago for its breakneck economic growth, had fallen so far.

Ireland has yet to request financial support of any kind, with Prime Minister Brian Cowen insisting it has enough money in its coffers to see it through well into next year.

- The Independent