The Irish government will put the finishing touches to a drastic 15 billion-euro savings plan after prime minister Brian Cowen defied calls for a snap election.
After a day of political drama that saw the junior coalition Green Party call for a general election, ministers are expected to discuss the four-year rescue package before Wednesday’s publication.
An embattled Mr Cowen said he wanted to stay in power to pass the crucial six billion euro (£5.1 billion) savings in next month’s budget. But despite opposition demands for an immediate election, he declared the drastic cuts were in the national interest.
The Greens had earlier stunned the prime minister by issuing a January deadline for a general election. In response, Mr Cowen said he planned to dissolve parliament in the new year.
The prime minister was dumped into the political crisis matching the country’s economic chaos less than 24 hours after the Cabinet signed off on a multi-billion bailout – unaware his two colleagues in the Green Party, leader John Gormley and Eamon Ryan, spent Saturday plotting an exit strategy.
Mr Cowen denied he felt betrayed. After an emergency meeting with Fianna Fail cabinet members in Government Buildings, the taoiseach dismissed talk of a heave against him or that he had been pushed by the Greens into agreeing to go to the polls, and said all colleagues had given him full support, including Mr Gormley.
He called for solidarity on the 15 billion euro (£13 billion) four-year road map to recovery and the estimated 90 billion euro (£77 billion) bailout loan from the International Monetary Fund and Europe. The 150-page four-year plan, which is being inspected by experts from the IMF and European Commission, will contain significant reforms to the tax system, with new levies in property and water on the cards and cuts to social welfare.
Mr Cowen is coming under intense pressure to step down from within and outside his ruling Fianna Fail party, with the opposition and two independent TDs demanding an immediate poll. Several Fianna Fail backbenchers have also warned that Mr Cowen’s time is up.
Speculation is intensifying that the government may not make it to the New Year, with a razor-thin majority to pass the worst budget in the state’s history on December 7 and a by-election looming on Thursday.
Monday saw bank shares come under pressure in the UK and America amid the uncertainty over the details of the Irish rescue package. Fears the debt troubles would soon erupt in other embattled eurozone countries, such as Portugal and Spain, also dragged the euro lower against the pound and dollar before the currency rallied ahead of Mr Cowen’s statement.