Ireland set to announce emergency budget

| April 7, 2009 | 1 Comment

Ireland’s Government is set to announce its second budget in six months today as the country faces a “very grave national crisis”, according to Finance Minister, Brian Lenihan.

The Irish Republic’s deficit is nearing 13% of GDP - quadruple the level allowed by the European Union.

The country has been hit by a raft of bad news of late after rating agency, Standard & Poor’s (S&P‘s) downgraded Ireland’s credit rating from AAA to AA+ last week, and has put the Irish Republic on a “negative” outlook, meaning that further downgrades are possible.

In the meantime, S&P’s also said it is concerned with the country’s banking system. Anglo Irish Bank is currently undergoing a fraud investigation, while Allied Irish Bank (AIB) and Bank of Ireland have been bailed out by the Government.

Ireland, which was the first country in the euro zone to enter recession, has also experienced a sharp rise in unemployment. The unemployment rate is creeping towards 12%.

Returning to the emergency budget, higher taxes and lower spending are likely, this is in stark contrast to other economies, which are spending billions and reducing taxes.

The country has experienced a boom since the late 1990s, with multinationals arriving to take advantage of one of the lowest corporate tax rates in the euro zone.

The ailing housing market has had a major impact on the economy and property prices have plunged by 40% since their high in 2006.

Last month, Ireland was given four years to get its budget deficit under control, to bring it in line with the bloc’s rules.

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