Our Friend in Need

George Osborne is quite right to offer £7 billion to help bail out the Irish economy, though one is disposed to wonder how a country of only 4 million people can build up such a massive crisis and, indeed, buy more British exports than India, China , Brazil and a fourth country the name of which escapes me, combined.

However, what most people will be wondering is how it is that a month ago it was absolutely essential to slice £7 billion from public expenditure since we couldn't possibly afford to maintain public services at the present level, and now, out of the blue £7 billion is available for another, albeit important, purpose.

The truth is that the £7 billion will be borrowed as, unlike Greece, or Ireland, the British government has no difficultly in borrowing at competitive rates. "The markets" are not breathing down out necks.The rates are, I suspect, not quite as competitive as the BBC1 news suggested last night - that Britain would borrow at 1.5% and the Irish would repay with 5% interest. If today's Guardian (page 13)is to be trusted the interest the governments have to pay on 10 year bonds is 3.5% for the UK and 8.1% for Ireland, so we shall still make a tidy profit.

The message of our contribution to the Irish bailout is that when the government wants, it can find the money at competitive rates. The curtailment of public expenditure is therefore not of necessity, but ideologically driven.

Although "the markets" are not yet at the throats of Britain, the signs are that they will now turn their attacks on to Portugal and Spain. It is high time the international community put a stop to this nonsense by agreeing to a Tobin-type tax on monetary transactions. Policy in democracies should be determined by the people, not financiers' greed.