As EU-led contributions to a bail-out package for are set to total €85bn, an embattled Irish government prepares to publish a four-year €15bn austerity plan.
Measures expected to be introduced include a new property tax, new domestic water charges and social welfare cuts. Recommendations from the IMF also include the tapering off of unemployment benefits the longer a person is out of work and a reduction in minimum wage.
A slowing economy and rising unemployment, along with a gap of 12% of GDP between public service expenditure and tax revenues, has caused fears that the nation may be on the verge of a double-dip recession. Until 18 November, the Irish government had continued to insist it had sufficient funds until next year, expressing a strong sentiment against handing economic sovereignty to Brussels.
The UK has offered a direct bilateral loan to the Republic, with the figure believed to be as much as £10bn. With Irish trade making up a significant share of the UK’s economy, the contribution will aim to maintain Irish demand for UK goods and services.
Chancellor George Osborne spoke of “very specific connections” between the UK and Ireland, making the loan “overwhelmingly in Britain’s national interest”. This marks a difference in stance towards Greece’s eurozone bail-out earlier this year, to which the UK did not contribute.