The UK can afford a £7bn loan to the ROI because it can just print it.
Here’s a great video explaining the US $2.6bn QE programme. (“Is this an episode of the Twilight Zone?”).
Here’s some Q&As from the BBC.
Why are the UK’s actions different from 1920s Germany and Zimbabwe?
Printing money can be defined as the central bank financing of government debts. This is what happened in both 1920s Germany and Zimbabwe and what the British government will insist it is not doing, although the short-term effect is similar.
According to the Maastricht Treaty, EU member states are not allowed to finance their public deficits by printing money. That is one reason why the Bank of England will buy government bonds from financial institutions, not directly from the government.
The Bank believes this form of QE is different because it is “printing money” as part of monetary policy – to prevent deflation. It is not printing money to help the government finance its deficit.
Also, unlike Zimbabwe, this is a temporary policy: the Bank expects to sell the government bonds back into the market when the economy recovers.
Hmmm this is beginning to feel a bit terrifying.
The UK Debt Clock ticks on…, increasing by £6,500 a second, at this rate will reach a trillion quid on January 27th….as the site explains that’s about £16,000 for every man, woman and child in the UK. As a comparison the projected Irish National Debt of Ireland (which still has some state assets left to flog) could reach £200bn – an astonishing £45k per head.