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Ireland unveils measures to trim deficit

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by Kay Mitchell

Ireland is the latest in a long line of nations forced to introduce tough austerity measures to deal with its spiralling budget deficit.

The country’s Government has outlined €15 billion (£13.1 billion) worth of budget cuts and is aiming to shave the deficit to 3% of GDP by 2014 to keep within euro zone rules.

Like many other Governments across the world, Ireland will be introducing spending cuts and tax hikes – a move that has led to many protests from workers across the euro zone.

The Irish deficit is forecast to be the equivalent of 32% of the country’s economic output this year.

Last month, credit agency Fitch cut Ireland’s debt rating to A+ from AA- with a negative outlook.

Fitch said the downgrade was due to massive banking bailouts, which have drained the economy, as well as uncertainty surrounding the fragile recovery.

Fitch also cut the short-term foreign currency issuer default rating to F1 from F1+.

Fellow rating agency, Moody’s, added that weak economic growth and rising borrowing costs could lead to a further cut.

Many analysts are of the opinion that Ireland will fall into recession again or face a Greek-style debt crisis.

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News posted: November 7, 2010

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