Who's Telling Political Porkies?

The Government has denied for the second time in 24 hours that it is in bailout talks with the EU, after the BBC reported yesterday that "preliminary talks" on financial support are taking place.
The BBC report made the unsubstantiated statement that recourse to the EU bailout fund was "no longer a matter of whether but when".
But a spokesman for the Department of Finance was adamant last night: "There are no talks on an application for emergency funding from the European Union."

The Republic of Ireland is in preliminary talks with EU officials for financial support, the BBC has learned.
It is now no longer a matter of whether but when the Irish government formally approaches the European Financial Stability Fund (EFSF) for a bailout, correspondents say.
The provisional estimate for EFSF loans is believed to lie between 60bn and 80bn euros ($82-110bn; £51-68bn).

European officials are trying to force Ireland to agree to a big rise in its rate of corporation tax as a condition of an economic rescue package. Rumours of an €80 billion (£69 billion) European Union bailout of the Irish economy gathered momentum this weekend as sources in Brussels claimed “preliminary” talks were taking place.

Although Ireland has yet to make a formal request for aid from the €750 billion eurozone bailout fund, City sources said tentative discussions had taken place on the structure of any rescue. Last night, Brian Cowen, speaking for Taoiseach, said there had been “no discussions of any sort about funding”.

France and Germany have said that Ireland would have to raise its 12.5% corporation tax rate in exchange for aid, according to sources close to the talks. Dublin’s tax breaks have been a long-standing source of irritation for both countries.

Brian Lenihan, the Irish finance minister, is fiercely opposed to the move for fear it would kill off an Irish economic recovery.
The “Celtic Tiger” economy was built on low corporate taxes that were used to attract inward investment from multinationals such as Intel, Pfizer and Dell.

Fears for Ireland’s financial health resurfaced last week after comments from Angela Merkel, the German chancellor. Merkel raised fears that investors in Irish debt would be forced to take losses on their existing bonds as part of a restructuring of the country’s debt. A statement on Friday morning, endorsed by Britain, France, Germany, Italy and Spain, said this would not happen.

Yields on Irish bonds, which hit a record of 8.95% on Thursday, fell back to 8.14%.
Lenihan has repeatedly denied that the country needs any external aid, arguing that “it makes no sense”.

Brussels, meanwhile, has insisted that Ireland has not applied for assistance from the European Financial Stability Fund. Sources close to the Irish government were claiming last night that Brussels was attempting to force the country into an EU rescue deal through a series of leaks. Ireland does not need to raise more debt until the second quarter of next year.

Portugal has also been in the spotlight in recent days, amid fears that it, too, could be forced into a debt restructuring. The Portuguese authorities are keen to shore up confidence in the country’s banks.
Bank of China, the state-owned lender, is in talks to buy a stake of up to 10% in Banco BPI, Portugal’s third-largest lender.

The stake would be acquired in exchange for access to the bank’s fast-growing business in Angola. Millennium BCP, another Portuguese bank, is in talks with Chinese institutions about a similar deal.