Debt-hit Ireland unveils budget cuts

Government outlines cutbacks to welfare and other departments as part of PM pledge to restore “economic sovereignty”.

Ireland economy

Ireland’s government has unveiled 2.2 billion euros in spending cuts as part of a new austerity budget that it says will be the toughest of its five-year term.

Brendan Howlin, the public expenditure minister, outlined the cutbacks to welfare and other departments in a speech to parliament on Monday – the first part of Ireland’s annual budget statement which is to conclude Tuesday.

Howlin said the Irish government had been forced to make “difficult and unpalatable decisions” regarding the latest cuts, but that the economy had improved a year after receiving a large international bailout.

“We have seen some improvement. Our position has stabilised. Twelve months ago we were Europe’s problem now problems in the European and global economy threaten our recovery,” he said.

“We are going through a painful process of adjustment. Public anger is acute because the public was not responsible for putting us in the position we are in.”

Economic pain

His comments came a day after Ireland’s prime minister made the first televised address to the nation in a quarter of a century to warn of economic pain ahead, saying the situation will get worse before it gets better.

Enda Kenny, who was swept to power with a record majority in February on a wave of voter anger over the country’s economic collapse and the harsh rescue terms laid down by its European partners, is bidding to keep the public on his side during years of upcoming austerity.

He has pledged to uphold austerity measures, most recently during a November meeting with German Chancellor Angela Merkel.

“I would love to tell you tonight that our economic problems are solved, that the worst is over,” Kenny said on Sunday. “But for far too many of you, that is simply not the truth.”

“I wish I could tell you that the budget won’t impact on every citizen in need, but I can’t,” he said.

Retrieving ‘economic sovereignty’

Kenny’s speech was made under 2009 legislation that allows the prime minister to address the nation on television in the event of a “major emergency”. The last time an Irish prime minister made a televised address was in 1986.

“I want to be the Taoiseach who retrieves Ireland’s economic sovereignty,” he said, using the Irish word for prime minister.

The government has broadly maintained its support since February, with an opinion poll on Sunday giving Kenny’s centre-right Fine Gael party 32 per cent, down from 36 per cent in the election.

But 62 per cent told the RED C/Sunday Business Post poll that they did not trust the government to manage the public’s finances.

Fault lines have appeared with Fine Gael’s centre-left junior coalition partner, the Labour Party, which has been forced to expel two legislators from its parliamentary party over opposition to its economic policies.

Rising taxes

Kenny confirmed an election pledge that income tax rates would not be increased in the budget, but said 1.6 billion euros ($2.15 billion) would be raised by new indirect taxes and 2.2 billion euros of cuts would be made to spending.

“This budget will be tough – it has to be,” he said.

Kenny said Ireland’s recovery was also dependent on European leaders resolving the debt crisis that has rocked markets across the continent in recent months. EU leaders are gearing up for make-or-break summit in Brussels on Thursday and Friday.

Kenny’s predecessor, Brian Cowen, was widely criticised for not addressing the nation on the financial crisis that led the state to take on tens of billions of euros of debt from private banks, and eventually to a EU-IMF bailout.

Source: Al Jazeera, News Agencies