This morning we have confirmation that Ireland will be asking for more support, and a larger support package than expected. Most of the major banks are asking for double what the market have asked for. News will be coming out through the course of the day on this story but expect volatility. History shows us that the UK normally fairs worse with Ireland in trouble due to their trading partnership and close links but this larger than expected requirement could also hurt European stocks and therefore investors confidence in the euro.
The total amount asked for is a shocking £21 billion. The total bill has now reached €70bn – equal to €17,000 for each citizen. Ireland’s banks have been crippled in my option due to their housing market which climbed at a record pace before bursting when the crises hit, since then their output has shrunk for three years in a row. Michael Noonan the Irish finance minister said that the country had been left with an ‘appalling legacy’ as a result of the banking crisis. This has probably put more pressure on Portugal that is in a similar situation compared to Ireland when they needed their first support package. They now face two bond redemptions, one on the 15th April (€4.3bn) and one on 15th June (€4.9bn). If these where to show another lack of confidence it makes it a lot more likely they will putting their hand out and would therefore change currencies including both the euro and sterling.
The real question is whether sterling or the euro will gain on the news?