I would like to update Parliament on the loan to Ireland.
Parliament will be aware that in July 2011 the Chancellor committed in principle to lower the interest rate on the bilateral loan to Ireland.
Following the agreement last year, the Treasury have now in principle agreed the new, lower interest rate on the bilateral loan to Ireland. The new rate will represent the UK’s cost of funds plus a small service fee of 0.18%. The UK’s cost of funding is defined as the average yield on gilt issuance in the six months prior to the disbursement of a tranche. This is subject to the loan agreement being revised to reflect the new rate.
I will update Parliament once the revised loan agreement has been finalised and signed.
HM Treasury has provided a further report to Parliament in relation to Irish loans as required under the Loans to Ireland Act 2010 alongside this statement.