BRITAIN TO COME TO IRELAND'S AID? - As Minister Brian Lenihan says it is 'not inevitable' that Ireland will need a bail-out, a front page headline in the Financial Times reads 'Osborne considers billions in Irish loans'. This comes amid growing expectation that Britain will play its part in a rescue alongside other EU countries, the ECB and the IMF. Chancellor of the Exchequer George Osborne is in Brussels for today's Ecofin meeting, so he will be pressed on this. Overnight UK Treasury officials said no request had so far been received from other euro zone countries for the UK to make bilateral loans to Dublin, but they were not ruled out.
Ireland is one of the UK's top trading partners. We accounted for three times as many exports from the UK as China did last year, and more than the combined exports to Brazil, Russia, India and China. UK exports here are worth about 2% of its national Income, and if the situation here were to get so serious that our output dropped, our imports of British goods would fall, damaging Britain's hopes for an export led recovery from recession. Northern Ireland would be particularly badly hit as 40% of its exports came south last year.
Britain is already already committed to about £6 billion in contingent liabilities if Ireland approached the European financial stability facility. Mervyn King, the head of the Bank of England, has said that the UK can not ignore troubles in Ireland. He said the overall financial sector exposure to Ireland is 'by no means trivial'. He also said he had concerns about the banking sector, as many UK banks lend directly to Irish households and companies - and their exposure is £83 billion.
Justin Urquhart-Stewart, of Seven Investment Managers in London, states that the Irish economy is vital to Britain and our nearest neighbour can not turn its back on the country. he says the two countries have a symbiotic relationship and that Britain is expected not only to provide financial support but also political. He says that the situation is all about political confidence if the Irish economy survives - and he says he believes it will of course survive. He says the UK government may even give more than reports currently suggest as he adds that the two economies just can not survive without each other.
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GREENCORE TO MERGE WITH NORTHERN FOODS - A merger has been proposed this morning between food group Greenmore and Northern Foods which will result in the creation of Essenta Foods. Greencore chief executive Patrick Coveney says that the companies are the two leading chilled prepared foods businesses in the UK and the merger is a great opportunity for them. He says the deal will double sales as each company has a strong market share in the categories it likes to be in. Mr Coveney says the most jobs overlap will occur in the purchasing and supply chain of the businesses and this will result in bigger synergies as the new company will be able to get better supply terms.
Greencore shareholders will vote on the deal in January and the new company is expected to list on the London stock exchange in April, Mr Coveney adds.
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MORNING BRIEFS - Betting firm Paddy Power is to create 500 new jobs in Dublin over the next three years as part of a global expansion. The company says that by the end of 2013 it will have created an additional 1,440 jobs globally. Paddy Power will employ over 2,000 staff in Ireland when its expansion here is complete. The company is also creating 810 jobs in the UK, and 130 jobs in Australia as its international business grows. All of the new jobs will be in place by the end of 2013.
*** Irish Life and Permanent says it expects operating earnings for the year to be significantly better than 2009 - that is despite the challenging conditions evident in Ireland. In an interim management statement. it says that early arrears cases in its residential loan book have levelled off since May. But arrears cases over 90 days in its Irish residential and commercial mortgage books continue to rise.
*** On the currency markets the euro is trading at $1.3495 cents and 84.94 pence sterling.
