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Irish report Irish report
by Euro Reporter
2011-12-03 12:00:44
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Ireland to extend bank guarantee

Ireland has no choice but to extend its state-guarantee to depositors and bond holders for six broken banking groups and subsidiaries because market funding for the lenders remains "fragile," Irish Finance Minister Michael Noonan said Thursday.

Noonan was speaking in the Irish parliament seeking approval for its so-called Eligible Liabilities Guarantee, first introduced in late 2009, to be extended into 2012.


Ireland budget may just be taste of pain to come

Europe's deepening debt crisis could mean Irish Prime Minister Enda Kenny's first austerity budget, set to be unveiled next week, is just a foretaste of worse to come raising the stakes for the state as it seeks to exit an EU-IMF bailout in 2013. Kenny has pledged to get Ireland's budget deficit, currently the worst in the industrialised world, under an EU limit of three percent of GDP by 2015 from an estimated 10 percent currently and was counting on 2012 being the worst in a fresh four-year run of belt-tightening.

But with Europe in danger of tipping back into recession as its financial crisis implodes Kenny may be forced to push through even harsher budgets in 2013 and beyond if Ireland's trade-dependent economy fails to produce sufficient revenues to meet its EU-IMF goals. "Unfortunately there will be several years of trying to restart the economy and keeping international markets happy," said Melanie Bowler, economist at Moody's Analytics, which is forecasting Ireland and the euro zone to fall back into recession next year. Ireland already raised its adjustment target for 2012 to 3.8 billion Euros from 3.6 billion Euros due to a weaker growth outlook with nearly 60 percent of the adjustment coming from spending cuts.

A Reuters poll on Thursday showed that economists expect Ireland to miss its medium-term fiscal goals due to the threat of a recession in Europe. The 2012 budget was meant to be the harshest of the next four with an adjustment of 8.6 billion Euros pencilled in for 2013-2015 as the government seeks to reassure investors its debts are sustainable and can meet its goal of exiting an 85 billion Euros EU-IMF bailout in 2013. Kenny's four year plan, which comes on top of four years of austerity under a previous administration, means that Ireland will have squeezed some 33 billion Euros (28.3 million pounds), representing nearly a fifth of GDP, out of an economy that is hoping to transform itself from European basket case to recovery story. But with the external backdrop darkening, analysts are sceptical that Ireland can avoid asking Europe for more assistance when the current package runs out in 2013.


Agency Workers Directive will damage economy

Chambers Ireland has today called on unions to re-enter talks regarding the upcoming implementation of the Agency Workers Directive. Jobs Minister Richard Burton had attempted to delay the introduction of the EU Directive, which is set to come into effect next week, which would entitle agency workers to better pay and terms of employment. The deal fell apart yesterday when unions and employers failed to agree.

Chambers Ireland has claimed however that it will "take cost out of economy rather than drive costs up".  Speaking this morning, John Forde, Chambers Ireland HR policy council chair said: "We clearly need responsible management of the economy and everyone must play their part.

"The principle of equal treatment for all workers must be accompanied by a qualifying period to ease pressure on businesses and enable flexibility, particularly for those companies seeking to hire agency workers on a short-term basis.  "If we do not have flexibility, then companies will simply not hire staff.”Unions need to be mindful of our collective need to facilitate work and employment in the economy, their current negotiating position on agency workers will lead to destruction of jobs and opportunities."

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