Ireland should now seek €80bn bailout to avoid 'long, slow death'
Ireland should seek an €80bn bailout from Europe to address our debt crisis and prevent years of stagnation, a leading economist has suggested.
Although Ireland has no immediate funding problems, it should seek up to €80bn from the European bailout fund to prevent ""a long, slow death", according to Societe Generale chief economist James Nixon last week.
Ireland's crucial 12.5 per cent corporate tax rate, so envied by some of our European partners, could also come under threat if we are forced to seek a bailout.
"I think if the IMF are called in, there will be many pounds of flesh extracted of which corporation tax will be only one," Nixon told the Sunday Independent.
"Unless Ireland significantly accelerates its fiscal consolidation, its debt dynamics will ultimately be unsustainable," he added. This situation "probably dictates that ultimately, however reluctantly, Ireland will be forced to seek additional funding from the European Financial Stability Facility".
The weakening of our public finances could also see Ireland completely miss its target to get its budget deficit under control by 2014. Expectations that the economy would grow boosting tax revenues may now have to be revised. Nixon notes that the IMF has concluded that it will take seven years and not the planned four years to sort out the budget deficit.
This view is also held by NCB, which notes: "It is highly unlikely we will reach the Government's deficit of 2.9 per cent by 2014 per their EU target, more likely it will be 5.5 per cent."