Osborne 'looking at options' to support the Irish economy

The Treasury is considering all options for financial aid to Ireland, Chancellor George Osborne said yesterday.

But he refused to speculate on whether the UK was on the brink of announcing bilateral loans, or making a contribution to a

European Union bail-out package.

He was speaking after talks in Brussels with his EU counterparts, at which Ireland's finance minister Brian Lenihan repeated Dublin's rejection – so far – of a bail-out offer from the member states.

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Mr Osborne said: "We (the UK) are going to do what we regard as being in the British national interest.

"Ireland is our closest neighbour, so it is in our national interest that the Irish economy is successful and that the Irish banking system is stable.

"Britain stands ready to support Ireland on the steps it needs to take to bring about that stability." He added: "I won't speculate on what kind of assistance we might provide.

"There are options, and we are looking at all of those.

"But remember, the Irish have not requested assistance and these are precautionary discussions."

Most EU governments now believe Ireland will take advantage

of a bail-out but probably not before the government has

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announced a four-year economic recovery programme, expected to be published next week.

The fact that Ireland agreed on Tuesday night to open its books to a team of EU, European Central Bank and International Monetary Fund experts reinforced the view that a multi-billion pound bail-out is possible.

IMF staff were expected to arrive in Dublin last night.

Mr Osborne had talks with Mr Lenihan yesterday afternoon, saying afterwards: "I have expressed my support for him."