Ireland cringes as chill of austerity budget sets in

Ireland’s government yesterday unveiled what many are calling its harshest ever budget, which came just hours after the European Union approved Dublin's $113 billion loan.

The much-leaked document contains plenty of pain, including $8 billion of spending cuts designed to stabilize public finances and rescue the country from its current economic crisis.

But the government has signaled that many more tough years are ahead. No section of society has escaped the axe, but there are widespread complaints that low and middle-income families will be hurt most. Opposition parties and civil society groups have attacked the austere nature of the budget while the far left says it's unnecessary.

When Irish finance minister Brian Lenihan announced deep spending cuts and tax increases for all sections of society, he said it was “a substantial down payment on the journey back to economic health.”

The new budget measures are largely a result of Ireland's EU loan, seen as a way to help Ireland and also protect the euro amid increasing investor worries over the stability of EU economies.

Headlining the budget was a raft of changes to the tax system, including a new “universal social charge,” along with cuts in welfare and the minimum wage alongside increases in college fees.

There have also been cuts in wages for public servants. Employees of semi-state owned enterprises will now have their salaries capped at $330,000 annually, though it is unlikely the change can be applied to current office-holders.

The office of prime minister took an $18,500 pay cut and government ministers will lose $13,000 each – staring with the next government. An election is expected in January. At $282,000, the Irish premier will still earn more than every other European leader, the salary topped only by President Obama and the premiers of Hong Kong and Singapore.

Most opposition lawmakers slammed the budget. There had been concerns in government circles that the budget would not pass but two independent lawmakers announced late Monday that they would vote vote against it.

In contradiction to her party’s objection to the measures, one Fine Gael lawmaker offered to abstain in order to give the government a majority. Lucinda Creighton told the Sunday Business Post that she did not “believe it would be good for the country for this budget to fall.”

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