18 January 2011

ECON Chair Sharon Bowles: Refund the interest to bailed out countries upon repayment of European loan

<div style="text-align: justify">&nbsp;Concerned by the high interest rates now being applied on the loan to Ireland under the formalised EU rescue schemes, Sharon argues that her proposal represents more solidarity with neighbouring European countries and a more effective way of dealing with deficits. As with other countries the UK currently stands to get a large windfall on the interest rates being charged on Ireland&rsquo;s debt repayments.<br /> <br /> Sharon Bowles MEP said: &ldquo;Fellow EU countries should be acting out of solidarity with their neighbours, not like investment banks. It is fair that a country sponsoring a rescue package should not be out of pocket, and should be guarded against risk, but that does not mean they have to pocket windfalls.&rdquo;<br /> <br /> &ldquo;I propose the profit, or premium, which sponsoring countries currently make out of the high interest rate, and that is higher than the cost to them of providing the loan, should be returned to the borrowing country once they have repaid their debt in full. These premiums should be kept in a pool that acts as insurance against default - I suppose it&rsquo;s a bit like a no claims refund.&rdquo;</div> <br /> <br />