Commission warns of risks to economy in hard-hitting bailout review
Published 29/01/2013 | 05:00
THE European Commission's latest review of Ireland's bailout has nothing more in it than the draft version leaked earlier this month.
The hard-hitting review assesses a wide range of topics, including doctors' wages, the Croke Park Agreement and the impact of the new Personal Insolvency Bill.
After visiting Dublin in October, commission officials highlighted that the economy faced several risks, despite returning investor confidence.
It warned of slower-than-expected growth, the difficulty for the Government in maintaining broad-based political support for tough budgetary choices and that lending to small and medium businesses may not materialise unless banks deal with their bad debts.
Key points from the eighth review include:
• 2013 growth has been revised downward to 1.1pc from 1.4pc.
• The cost of drugs tripled from 2000 to 2008.
• Irish doctors are among the best paid in Europe and wages must be tackled.
• The new personal insolvency laws may favour more highly indebted mortgage holders over those with average borrowings.
• More needs to be done to help struggling small and medium enterprises.
• Banks may need more money unless the mortgage-arrears problem is dealt with.
• Banks may need more capital if growth continues to fall.
• Job policies need to be significantly strengthened to avoid the unemployed remaining out of work for too long.
While the commission takes aim at doctors' salaries, it also calls for workers protected by the Croke Park Agreement to bring their pay into line with civil servants in other countries.
The report also urges the Government to scrap plans for further redundancies in the public sector, saying it will lead to worse services and push more people on to the dole.
The completion of the review allows for the €0.8bn to be released from the European Financial Stability Facility and the European Financial Stability Mechanism, bringing the total so far from Europe and the IMF to €56.6bn.