Ireland in emergency talks as bailout looms

Irish finance minister, Brian Lenihan, has today said the country is preparing to make a formal request for an emergency bailout.

The exact amount of the loan, which will come from the EU rescue fund, which was established by European Governments and the International Monetary Fund after the Greek debt crisis earlier this year, was not disclosed.

However, Mr Lenihan said it would be “tens of billions” adding: “I will be recommending to the Government that we should apply to a programme and open formal negotiations,” he said. “Certainly, it will not be a three-figure sum.”

The report comes just a week or so after Ireland’s Government denied claims that it would accept emergency funding, insisting it was fully funded until at least the middle of next year.

However, Mr Lenihan has now said that the country was facing a deficit of more than £16 billion and is describing the loan as “a standby fund”.

As a result of the deficit, the Irish Government is introducing tough austerity measures - something which many fellow euro zone nations have implemented.

Ireland, which has suffered one of the deepest recessions of its fellow euro zone nations, is aiming to save €15 billion (£13 billion) between 2011 and the end of 2014.

However, like many other nations, the savings are likely to cause protests and trade unions have already warned of “civil unrest”.

There are also plans to cut the minimum wage by one euro to €7.65 (£6.55).

Ireland, once known as the “Celtic Tiger” economy, experienced a property boom in the late 1990s, with multinationals arriving to take advantage of one of the lowest corporate tax rates in the euro zone.

However, the country’s banking system came close to meltdown after the slump in the country’s property market resulted in a fall in the value of investments linked to it.

Four of the country’s banks have now been nationalised, while property prices have fallen by more than 50%, in some cases.

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