German Chancellor Angela Merkel appears to have retreated from any German belief that Ireland should raise its corporate tax rate.

Speaking to RTÉ News, Mrs Merkel suggested the corporate tax rate was a matter for the Irish Government.

When asked if she shared the concerns of some German citizens that the Government should reconsider Ireland's 12.5% rate, she said that all countries were aware of the eurozone's protection umbrella and were able to choose to access it.

She added: ‘Everything else is up to each individual country.’

Separately, French President Nicolas Sarkozy said today he expected Ireland to raise its corporate tax rate but said an increase would not be a condition for any bailout.

Speaking at a news conference in Lisbon on the sidelines of a NATO summit, he said he expected Ireland to raise its corporate tax rate.

‘It's obvious that when confronted with a situation like this, there are two levers to use: spending and revenues,’ he said.

‘I cannot imagine that our Irish friends, in full sovereignty, (would not use) this because they have a greater margin for manoeuvre than others, their taxes being lower than others.

‘In the conditions for activating the (bailout) mechanism, there are no fiscal demands,’ he added.

Sweden and Britain consider assistance

Meanwhile, the Swedish prime minister has said that Sweden, which is not a member of the eurozone, could consider a bilateral loan to Ireland if one was requested.

Fredrik Reinfeldt told RTÉ News: ‘There could be some bilateral help. We are waiting to hear more from the Irish Government. We feel that we are very close to Ireland and are always ready to listen and help if we can do so.’

Mr Reinfeldt said that Sweden had provided bilateral loans to both Iceland and Latvia.

On the question of corporation tax the Swedish prime minister said: ‘It's a decision for the Irish people and Government to take.

‘It's not an issue among Swedish voters, we accept there could be differences in corporate tax levels. We lowered it ourselves, and we're still discussing it.

‘It's a nation based decision to take and it should be respected as such.’

Britain's Foreign Secretary William Hague has said he hopes the euro survives, but it is impossible to know whether the currency would collapse.

In an interview on BBC Radio's Today Programme, he said eurozone stability is very much in Britain's interest and that there is a case for Britain assisting Ireland, if needed.

'We do stand ready to assist in the case of Ireland, although let me stress, that no formal request has been made for that assistance', he said.