Main focus of Thursday, November 25, 2010

EU forces Ireland to cut spending

Ireland has laid out an austerity plan for reducing its budget by 15 billion euros - 20 percent of annual expenditure - by 2014. Europe's press sees no alternative to the cuts demanded by the EU and the IMF, while pointing to shortcomings in the four-year plan.

Frankfurter Allgemeine Zeitung - Germany

Although there is no alternative to the Irish government's planned austerity programme that doesn't mean its success is guaranteed, writes the conservative daily Frankfurter Allgemeine Zeitung: "The Irish parliament has no choice but to agree to the budget despite the government crisis in the country, otherwise no international aid will be made available. Should the austerity budget fail to pass, it would only heighten the unease in the financial markets. At the same time, the part played by the Irish blood, sweat and tears programme in easing the confidence crisis should not be overestimated, because its chances of success are all too uncertain. The growth prognoses are rather optimistic. But the planned contraction is so drastic that it could choke the Irish economy and jeopardise the consolidation goals." (25/11/2010)

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The Irish Times - Ireland

The Irish government's four-year austerity plan provides insight into Ireland's financial future but neglects certain key aspects, the liberal daily The Irish Times criticises: "The growth rate is a key issue for the international investor community, which is trying to work out whether the Irish economy will grow sufficiently quickly to make its public and private debt levels sustainable. Similarly, increasing domestic sources of funding is viewed as a key step in reducing dependence on external investors. In terms of pro-growth policies, the main message in the document is that the Government stands behind its longstanding pro-export pro-business strategy. ... Furthermore, the plan is silent on the impact of the banking crisis on projected growth rates. While much will turn on the resolution plans that are set to be announced in the coming days, some discussion of this key issue would have been welcome." (25/11/2010)

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La Repubblica - Italy

Ireland must now come to terms with drastic budget cuts but if the financial markets had been integrated sooner the collapse of its banking system could have been prevented, the left-liberal daily La Repubblica writes: "The major Irish banks no longer look so big when you look at them in the context of the gross domestic product of the Eurozone. In the face of the crisis the process of integrating Europe's financial markets and state aid must be continued. The citizens and governments see this as renouncing their national independence, but this is by no means the case. It is a way of freeing themselves of the dictatorship of the big banks and financial institutions. Integration turns giants into dwarves and furnishes the decision makers with the means to protect themselves against the financial institutions' more or less explicit attempts at blackmail. Moreover integration facilitates the kind of financial intervention that benefits the real economy and jobs rather than the financial institutions." (25/11/2010)

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