Quitting bailout would be 'lethal', says Kenny
Published 10/05/2011 | 05:00
TAOISEACH Enda Kenny last night firmly ruled out any moves to pull out of the EU-IMF bailout.
And he said he had no intention of attempting to bridge the country's huge deficit in one year, saying this would deliver a "lethal injection" to the economy. The Taoiseach rejected claims from UCD economist Professor Morgan Kelly that the country will be bankrupt unless we pull out of the bailout deal.
The controversy comes as the Government attempts to negotiate a 1pc cut in the interest rate next week and seek better terms to match those of Portugal and Greece.
"Politics is about people and their lives and their careers and their opportunities. That's what I deal in and I've no intention of delivering a lethal injection to the Irish economy by trying to bridge the extent of the deficit in one year," Mr Kenny said when asked about Prof Kelly's economic solution.
If Ireland reneged on the deal, the Government would have to immediately slash €18bn off public spending to be able to fund itself because it would no longer have financial support from the EU/IMF.
Mr Kenny also denied weekend reports that a cut in Ireland's interest rate had already been agreed. He insisted discussions were "still ongoing" ahead of key meetings next week.
And with a new deal for Greece under discussion, the Taoiseach said it had always been his Government's plan to get an improved deal for Ireland.
"Ireland will continue to seek improvements in this deal, as we've always said," Mr Kenny added.
Transport Minister Leo Varadkar earlier branded Prof Kelly's proposal to abandon the bailout as "ridiculous".
"It's always important to listen to what Morgan Kelly has to say. He was one of the contrarians who was right about the banking crisis and others wouldn't listen," said Mr Varadkar.
"But that doesn't mean he's right all the time. My big concern is the prescription that he's offering. So, while Morgan Kelly's analysis should be listened to, his solutions quite frankly are ridiculous."
The UCD economist, who predicted the extent of the Irish property crash, claimed the Government should walk away from the banking debt, leaving it to the ECB.
He said this would leave the country with a "survivable" €110bn debt.
However, the Department of Finance warned that pensions, child benefit and the wages of 300,000 public sector workers would have to be slashed by 33pc if Ireland abandoned the bailout.
During a special Dail sitting yesterday to mark 'Europe Day', Mr Kenny called for a more flexible approach from the ECB for countries in financial difficulty.
Mr Kenny said the Government remained "fully confident" it would be able to reduce the current rate.