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Economist warns on cuts

THE Government should be chasing growth rather than slashing spending, State Street chief economist Chris Probyn has said.

While Ireland is now taking "baby steps to some sort of recovery" following last week's bank stress tests, the Government is wrong to keep cutting spending, Dr Probyn said in an interview yesterday.

By insisting on spending cuts, the "IMF is doing to your economy what it did to the Asian economies in the 1990s", he warned.

Those countries are still building up foreign-currency reserves so that they never have to obey the IMF again, he added.

The US economist also criticised the present and previous government's decision not to force senior bondholders to take losses on their loans to Irish banks -- but added that he believes burden sharing will still happen because Ireland will have no other choice.

"I don't think they will be honoured," he said. "I can't believe that ultimately there will not be some sharing of the pain."

Irish Independent