Bailout relief not enough says union leader

Initial optimism surrounding a revised European bailout deal for Ireland's struggling economy is beginning to dissolve after claims the Republic's debts would remain overwhelming.

The claim was made by the General Secretary of the Irish Congress of Trade Unions, David Begg, who said Ireland would not be able to pay its debts even under the terms of the revised bailout from Brussels, which reduced interest rates on the loans from six percent to less than four percent.

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Speaking during the annual MacGill Summer School series in County Donegal, Begg blamed the government's planned austerity cuts for "driving down economic growth," and so further preventing any future ability to repay the EU bailout.

The planned spending review is expected to result in cuts of up to €4 billion.

"This will compound the deflationary impact of the €20.6 billion that has been taken out of the economy in three budgets since 2008. It's difficult to see how this will not have a debilitating effect on public services because at this point it is cutting into muscle," said Begg

Warning that yet more austerity on a nation still reeling from the impact of the worldwide recession that laid low the Celtic Tiger would result in a "lost generation" of Irish people, Begg added: "There is no growth in the economy, and without growth to do some of the heavy lifting of adjustment, it is not possible to generate the level of primary surplus necessary to allow for debt repayment."

Ireland has been told to brace itself for "difficult" times ahead, as, following news of the revised bailout, Taoiseach Edna Kenny warned the savings on the bailout would not be used to "soften" the next budget, which is due in December.

The government is set to discuss what financial programs need to be shelved, and what must be maintained this autumn, but also speaking at Glenties, Mr. Kenny said the government "would not shirk its responsibilities."

After the emergency Brussels meeting of eurozone national leaders, Taoiseach Kenny said Ireland's interest rate would now fall by around two percent from the current 5.8 percent and that this would mean saving on bailout payments amounting to between €600 million and €800 million a year. Finance minister Michael Noonan later revised this saving estimate upwards to €900 million and some reports have indicated that the savings to the Irish economy could reach €1 billion a year.

The bailout payback period will also be doubled to 15 years as a result of the agreement at the Brussels gathering.

"The flexibility that we sought under the fund is now available for Ireland," Kenny said.

"I am relieved to the extent that the conclusion of this meeting is good for our people and good for our country. We got a good conclusion to this meeting," he added.

Separately, and in the light of the Brussels outcome, the British government said it would cut the rate of interest on its £3.26 billion loan to Ireland.

The British government's chancellor of the exchequer, George Osborne, said that easing the financial pressure on Ireland was in the UK's "national interest."

 

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