Is helping Irish economy in the UK's interest?

Talk of a possible bail-out for the Irish economy has dominated headlines since the weekend

At least five million people living in the UK might argue there are very good reasons for the country to help out financially as the Irish Republic faces economic troubles.

That is the number of people with an Irish grandparent or parent the last Census suggested were living in the UK in 2001.

A BBC database also showed that about 495,000 Irish-born people were living in Britain in 2001, the highest concentration outside of the Irish Republic anywhere in the world.

So, as the Irish government stands on the verge of an EU-backed bail-out, amid a gaping budget deficit and banks propped up by European Central Bank loans, many people in the UK will be watching developments with interest.

UK Chancellor George Osborne - whose own roots are in the Anglo-Irish aristocracy - has said the UK government stands ready to help, without specifying exactly how, as it is "in the UK's interests" to do so.

However, the argument in favour of financial help is based on far more than just family ties.

For when it comes to economic importance to the UK, the Irish Republic punches above the weight its population of nearly 4.5 million suggests it should.

On Thursday, Prime Minister David Cameron did not want to speculate about the financial health of another EU country, saying it was "a country that is a close neighbour, a good friend, a country that we have very close political and economic relations with".

But he added: "Obviously if you look at the relationship between Britain and Ireland, it's one of our biggest export markets.

"We export more to Ireland than we do to Brazil, Russia, India, China combined.

"Now perhaps that is not a great reflection of how well we're doing in the rest of the world but that nonetheless is the facts.

Economic crossover

"Our banks are very connected to the Irish banks. We have an interest in not just the eurozone being a success, we have an interest in Ireland being a success."

Liberal Democrat MP John Thurso echoed that view when he told the BBC: "There's a lot of crossover between the two economies, and certainly just standing back and letting Ireland go down would not be in Britain's interests at all."

According to the Office for National Statistics, last year the Irish Republic was the fifth biggest in the list of global countries the UK exported goods and services to.

The trade - driven by food and drink, fashion and textiles - was worth £23.8bn (28bn euros) to the UK.

About 40% of exports from Northern Ireland go south of the border and, according to government figures, every person in the Republic spends an average of £3,607 per year on British goods.

In the same year, the UK imported goods and services worth £16.8bn from its neighbour - making the Irish Republic one of the world's eight largest exporters to the UK.

There is also the matter of the estimated £88bn worth of loans made by UK-based banks to Irish businesses and households.

The majority have come from the Royal Bank of Scotland, which owns Ulster Bank; the latter operates on both sides of the Irish border.

And Irish banks are also active in the UK - the Bank of Ireland runs the banking arm of the Post Office.

At the same time, British retailers such as Tesco and Marks & Spencer have a high-profile presence in the Irish Republic and Irish companies such as Ryanair are a big employer in the UK.

Journalist Thomas Molloy, writing in the Irish Independent, offered this view from the other side of the sea: "There is no other European country that stands to lose more if Ireland's economic problems worsen or the banking sector collapses."

He added: "The UK can ill afford any collapse here.

"Those fears, as well as the deep and genuine political ties which have followed in the wake of the Good Friday Agreement, were the inspiration for the UK's decision to make it clear that London will back the eurozone if the crisis deepens."

David Kern, chief economist at business organisation the British Chambers of Commerce, said while he agreed with the UK government that it was in the UK's interest to help the Irish Republic, he did not believe there was any need to panic.

"The Irish economy is not actually collapsing. In Ireland they have taken very tough measures to deal with the deficit and the fiscal position is being tackled in a very forceful manner," he told the BBC.

"The chances are that this particular alarm will gradually subside."

He said that should the UK be required to help, it would do far less damage to the UK than if the government stood by and did nothing.

'Eyes wide shut'

"I believe that whatever we will do, we will do initially in order to help ourselves. I don't think it's about doing favours. It is pure economics," he said.

However, whatever the depth of economic ties, there are many who argue the Irish Republic's problems are ones for the eurozone countries to resolve and not the UK taxpayer.

Conservative MP Andrew Bridgen told the Commons: "The test of any currency is actually in the tough times, not just the good times, and this was explained to all the countries who joined the euro, many of whom, in my view, joined with their eyes wide shut.

"Isn't it abhorrent that this liability and failure of the euro should become a liability to the UK taxpayer at this time?"

Meanwhile, other MPs have expressed concern that if the UK was to offer financial support to Dublin, it might also be obliged to back other eurozone countries that run into difficulties.