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Friday, March 24, 2023

Ireland under bail-out pressure

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Brian Lenihan is set for talks with his single currency counterparts in Brussels

Ireland is facing intense European pressure to accept a massive financial bail-out – not just to rescue the Irish economy but to save the single currency itself.

Ahead of talks between the 16 eurozone nations, Dublin was still insisting it needed no help from either the EU or the International Monetary Fund.

The nation’s sovereign debt, ministers emphasised, is fully covered until next summer.

But when Finance Minister Brian Lenihan sits down with his single currency counterparts in Brussels, the message will be that “contagion” is threatening other struggling eurozone economies and must be contained.

German Chancellor Angela Merkel made clear on Monday that the future of the single currency could be at stake if Europe suffers a resurgence of a Greek-style crisis fuelled by speculators gambling on the euro’s plight.

A cabinet meeting will determine what stand Mr Lenihan takes, but he will face warnings in Brussels that the Dublin Government cannot cling to economic sovereignty if it risks the single currency’s future.

A government four-year plan designed to fix the economic crisis is due to be published next week – but that will not quell demands for decisive action now to avert more euro instability.

Greece and Portugal both fear that Irish euro “contagion” will infect their fragile economic recoveries.

The Portuguese finance minister will tell Mr Lenihan that Dublin must recognise the Irish economic problem is also a problem for his country and for Greece, and potentially for the entire eurozone.

Taoiseach Brian Cowen gave little sign on Monday night of a willingness to accept help. He insisted the government intended to sort out its own budgetary and fiscal problems – which include a deficit running at 32% of its national wealth. That compares with a maximum deficit level permitted under the single currency of just 3%.

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