Irish austerity

Now that European Union finance ministers have formally approved the 85-billion-euro ($112 billion) bailout of Ireland, the country's parliament has moved a step closer to implementing a wide range of austerity measures designed to bring the one-time Celtic Tiger back to financial health.

The Irish parliament voted in favor of tax increases on gasoline and diesel fuel in an initial step toward introducing a wide range of other measures to slash the country's deficit.

The Irish government's austerity plan calls for cuts amounting to six billion euros in 2011. Overall, measures to downsize expenditures total some 15 billion euros by 2015, as stipulated by the rescue plan worked out between Dublin and the European Union and International Monetary fund.

Other aspects of the bailout package will be voted on successively over the next few weeks and possible into the new year, according to government sources.

Vote is ‘clear signal' for reform

The IMF and the EU both welcomed the “clear signal” sent by the Irish parliament to tackle Dublin's debt crisis. The government's austerity measures are a precondition for receiving the EU rescue funds.

Other measures the Irish parliament will be voting on in the next few weeks include drastic spending and subsidy cuts for child care, social welfare benefits, public sector pensions and property-based tax relief.

Eliminating tax breaks on real estate will draw a line under the policies that helped fuel the country's property bubble and led to a development binge of homes, shopping malls and hotels that now stand mostly idle or half-built.

Author: Gregg Benzow (Reuters, AFP, dpa)
Editor: Rob Turner