Shockwaves from Ireland’s last-ditch attempt to avoid a bailout reverberated around global markets on Tuesday as the leader of the European Union warned the eurozone was facing a ‘survival crisis’.
Share prices dropped in London, New York and European bourses amid fears that Dublin's go-it-alone strategy would backfire and cause contagion across the 16 nations.
The Irish prime minster Brian Cowen insisted the heavily indebted country did not need financial assistance - estimated at as much as €100billion (£85billion) — to support its stricken banks.
As he was speaking, Ireland's finance minister Brian Lenihan was battling with Brussels traffic and turned up one and a quarter hours late for the crucial meeting with eurozone colleagues.
George Osborne, the UK finance minister, was travelling to Brussels for a meeting of all the EU's 27 finance ministers where he may have to contribute as much as £7billion to any Irish rescue. There were suggestions that the UK was facing pressure to make bilateral loans to Ireland, separate to facilities put together in anticipation of a crisis.
A UK Treasury spokesman said: “There has been no formal request for assistance from the Irish government. We are not going to engage in speculation on what may or may not happen in Ireland - or in any other country.”
Lenihan told the media scrum assembled outside the European commission that Ireland is “fully funded until the middle of next year”, adding that the markets are “not being good to Ireland”. Borrowing costs for the country rose through 9% last week but have since fallen back in anticipation of support from the EU or the IMF. Cowen, addressing the Irish parliament, acknowledged the need to calm the markets and reduce the price that it is costing Ireland and other countries such as Spain and Portugal to raise money from international investors.