What a $100 billion EU aid package means for Ireland
Ireland is negotiating with the European finance officials over an aid package that could come with strings attached.
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“The final nail in the coffin was the [issuing of] €31 billion in promissory notes for Anglo and Irish Nationwide,” she says.Skip to next paragraph
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Anglo-Irish bank is widely blamed for precipitating the crisis by engaging in risky lending in to property developers. It was nationalized in January 2009 after being revealed to be on the brink of collapse and has received $47 billion in taxpayers’ money since then.
Battle over Ireland's corporate tax
Many are concerned that Ireland’s 12.5 percent rate of corporate tax, a key plank in attracting foreign investment, will be a target for the EU. Ireland’s tax rate is the third lowest in Europe after Bulgaria and Cyprus.
The rumblings have already started in Brussels: Ministers from France, Italy, and Austria spoke about the tax rate yesterday. Austria's finance minister Josef Proll took a particularly strong stance, saying the EU must demand it rises as a condition of any aid.
An Irish EU spokesperson told the Monitor this afternoon that any discussion that any discussion of conditions attached to a bailout would be “hypothetical at this point.”
EU sources told journalists in an off-the-record briefing today that the bailout was now just a formality and that negotiations on such matters are started long before anything is made public.
Impact of Ireland's crisis
The state of Ireland’s national finances has been at the centre of press speculation for over a week. It’s not just the macroeconomy that is suffering, though. Ireland’s decline has had tangible consequences on Main Street.
Unemployment is up, wages are down, and emigration has returned. A budget due December is expected to raise taxes significantly and make deep cuts to public services.
For many it feels like two decades of rising living standards have come undone in just three short years. According to official statistics, unemployment has hit 13.7 percent 27,700 people left the country in the first four months of this year, more than any time since 1989. An estimated 5,000 Irish people leave every month, an increase of 81 percent on figures from 2009.
Economist Morgan Kelly struck terror in to the heart of the nation when he wrote that worse was to come.
“If you thought the bank bailout was bad, wait until the mortgage defaults hit home,” he wrote in the Irish Times.
Michael Culloty, a spokesperson for Irish charity, the Money Advice and Budgeting Service (Mabs), which provides independent advice to people with financial problems, says that people are seeking advice but that widespread foreclosures have not yet begun.
“We’re currently experiencing an increase in the volume of people we see,” he says. “People are getting into difficulty with consumer debt in particular.”
Mabs’ clients include people of all socioeconomic classes, from right across Irish society. “One in three people coming to us has a mortgage,” he says.
A report published Wednesday by the government-appointed Expert Group on Mortgage Arrears and Personal Debt said that one in 10 mortgage holders was in arrears in making payments.
The report dashed any hopes of a bailout for families, however. While the "expert group" is recommending a major overhaul of Ireland’s punitive bankruptcy laws and the deferment of interest payments on distressed mortgages, it did not recommend banks institute a formal debt forgiveness scheme.