Open

Coming up

Don't miss

Replay


LATEST SHOWS

AFRICA NEWS

Air Algerie investigation continues

Read more

AFRICA NEWS

Dozens of youths trampled to death on Conakry beach

Read more

AFRICA NEWS

Ebola death toll tops 700

Read more

MEDIAWATCH

UNRWA official breaks down over Gaza deaths

Read more

DEBATE

Argentina Defaults - Kirchner Cries Foul Over 'Vulture Funds' (part 2)

Read more

DEBATE

Argentina Defaults - Kirchner Cries Foul Over 'Vulture Funds'

Read more

MEDIAWATCH

Renault's women drivers ad deemed sexist

Read more

FOCUS

Constitution prohibits Aung San Suu Kyi to run for president

Read more

THE BUSINESS INTERVIEW

War and Markets, with Steen Jakobsen, Chief Economist at Saxo Bank

Read more

  • Kerry, Ban announce 72-hour humanitarian ceasefire in Gaza

    Read more

  • Interactive: France’s new plan to counter jihadism in Africa

    Read more

  • French Jews speak of growing fear in Paris amid Gaza conflict

    Read more

  • Argentinian markets plummet following default

    Read more

  • Video: Inside Hamas ‘terror’ tunnels in Gaza

    Read more

  • France remembers murdered socialist hero Jean Jaurès

    Read more

  • Sierra Leone declares state of emergency over spread of Ebola

    Read more

  • Investigators reach MH17 site amid 24-hour ceasefire

    Read more

  • Air France ground workers to strike on August 2

    Read more

  • Scores feared dead in India landslide

    Read more

  • Russia ordered to pay further €1.9 billion to Yukos shareholders

    Read more

  • Iraq's Christians: Nowhere to Run?

    Read more

  • Russia defiant as US, EU unveil 'phase three' sanctions

    Read more

  • US House votes to sue Obama for over-reaching his powers

    Read more

Europe

Irish austerity plan leaves voters irate and markets cool

Video by Kathryn STAPLEY

Text by News Wires

Latest update : 2010-11-25

Ireland's drastic austerity plan has caused dismay among the public and drawn little enthusiasm from investors, leaving the government vulnerable to angry voters in forthcoming elections.

REUTERS - Ireland's government will face the first real backlash from a vicious set of austerity measures when voters head to the polls in the northwestern county of Donegal on Thursday.

Prime Minister Brian Cowen's four-year plan for tackling the worst budget deficit in Europe has failed to impress investors or calm fears that Ireland's woes will tip other euro zone nations into crisis.
 
The 15 billion euros ($20 billion) in spending cuts and tax increases unveiled on Wednesday will form the basis for an IMF/EU rescue package worth about 85 billion euros.
 
THE REACTION FROM THE IRISH PRESS
But the measures, including cuts to the minimum wage and thousands of job losses, are likely to seal defeat for Cowen's Fianna Fail party in the poll for a vacant parliamentary seat in Donegal and result in Cowen's majority shrinking to just two.
 
Ruling Fianna Fail held the seat in Donegal South West but is expected to lose it to smaller Sinn Fein in the by-election.
 
With Cowen's coalition imploding amid public disgust at having to go cap in hand to the IMF and the EU, the Donegal vote raises the risk that the 2011 budget, the first step in the four-year plan, may not make it through parliament on Dec. 7.
 
Failure to get next year's budget passed would turbo-charge the crisis in Ireland and Europe and analysts have said the main opposition parties may abstain from voting to allow the budget through if it looks like Cowen cannot get the numbers.
 
Centre-right Fine Gael and left-wing Labour have not said they will abstain and their refusal to countenance a national consensus on the budget has pitted Ireland's fiscal path with uncertainty.
 
Cowen's government is not expected to last beyond the first quarter of 2011 and Fine Gael and Labour are likely to form a coalition government with new ideas about how the budget can be brought under control by a deadline of 2014.
 
Even excluding the political uncertainty surrounding the 2011 plan, investors are sceptical the fiscal targets can be achieved with rating agency Standard & Poor's dismissing the growth assumptions underlining the strategy as too optimistic.
 
Portugal, Spain
 
Euro zone policymakers are hoping that Spain and Portugal can stave off an Irish- or Greek-style debt meltdown.
 
A Reuters poll this week showed that 34 out of 50 analysts surveyed believe Portugal will be forced to follow Ireland and ask for help. In a separate survey only four out of 50 economists thought Spain would seek external aid.
 
Unlike Ireland and Portugal, Spain has its 2011 budget in the bag and its debt as a percentage of gross domestic product is estimated at 60 percent this year compared with Ireland's 100 percent and Greece's 145 percent.
 
But German proposals for private investors to take a hit in future euro zone debt crises have markets spooked, ramping up borrowing costs for Madrid.
 
Highlighting the fault-lines across Europe, Spain's Economy Minister urged Germany on Wednesday to stop pushing its idea of a permanent euro crisis mechanism.
 
IRELAND: HOW DID THE TOAST OF EUROPE COME TO THIS?
In Dublin, officials from the IMF and the EU will continue talks on a package of loans to cover Irish sovereign funding costs and an injection of fresh capital into its banks that will see Dublin left with effective control of the top three banks.
 
Billions of euros could be used immediately to recapitalise the banks but most will be kept as a backstop in case they need more in future and to ease funding strains.
 
Bailout package negotiations may be finalised over the weekend, sources said.


 

Date created : 2010-11-25

  • IRELAND

    Premier vows to pass austerity budget before early elections

    Read more

COMMENT(S)