Ireland must cut spending to survive, minister says

Dublin: Ireland needs to cut spending in the budget for next year in order to ensure the country's very survival, Finance Minister Brian Lenihan said yesterday.

Lenihan reiterated he needed to find 4 billion euros (Dh22 billion) of savings in the December 9 budget for 2010 just to stabilise the deficit at 12 per cent of gross domestic product next year, already four times the level allowed by the European Union.

Lenihan has already presented two emergency budgets in little over a year, so far mostly focused on taxation.

"Had we not taken this action, the deficit would have ballooned to 16-17 per cent of GDP — a level at which the very essence of the country's survival could have been in question," Lenihan wrote in an op-ed piece for the Sunday Business Post.

"The stabilisation of the deficit [next year]... will send a clear signal that our strategy is working and will reassure lenders that we have the capacity to tackle our own difficulties," Lenihan said in the article entitled Survival depends on spending cuts.

Strikes

Government officials have already warned that failure to control public finances could eventually land Ireland in the hands of the International Monetary Fund (IMF), which would impose even tougher cuts.

Unions have held several protests and strikes against the government's plans to cut public sector pay and they have threatened a fresh strike for Thursday if an alternative plan was not agreed in coming days.

Lenihan has pledged not to increase any taxes on December 9 apart from a new carbon tax but the junior coalition member Green Party has pushed for additional tax measures.

Lenihan said however the problem lay on the expenditure, not revenue side of the budget.