Lenihan warns Budget will be worse than expected
The banking nightmare is finally ending but the country must endure more suffering to foot the bailout bill, finance minister Brian Lenihan said today.
Stark plans to slash at least €3bn from public spending in the December budget would now be worse than expected to fund the clean-up of Anglo Irish Bank.
The previous cost-cutting target would have to be "upped" significantly while a new four-year road-to-recovery plan for the country would be drawn up in the coming weeks, he said.
Mr Lenihan said he did not expect hospitals or schools would be shut down under the savage cuts but warned of a fundamental value-for-money overhaul of the public sector.
Offering cold comfort to taxpayers saddled with up to €34.3bn debts from reckless Anglo lenders, he insisted the banking crisis was coming to an end.
"This particular nightmare the Government has had to live with, the Irish people have had to live with, and I have had to live with since September 2008," he said.
"We are now bringing closure to that."
At Government Buildings, Mr Lenihan said the Irish people had a right to be angry with bankers who had threatened the very security and future of the State.
While the financial regulator bore much blame, he admitted the Government also made serious economic mistakes - with low taxes and high spending during the boom.
But he said the "final figure" on the banking bailout - revealed by the Central Bank - would allow the country to get its house back in order.
A four-year plan would be published in November setting out precise budget targets up to 2014.
This would be "a realistic framework" to allow people to understand exactly what was involved in the years to come, he said.
Mr Lenihan said the financial regulator had erred on the side of caution when detailing the Anglo bill and there was a possibility of some losses being clawed back.
There would also be a return from the State's takeover of Allied Irish Bank (AIB), he predicted.
While the taxpayer would own the vast bulk of AIB, it would remain fully commercial.
It would be nursed back to its former "greatness" under new management, according to the finance minister.
Mr Lenihan said Ireland now needed some "time and space" to regain credibility on the international money markets.
Planned auctions of Government bonds in the coming months have been postponed until the new year in an attempt to boost confidence among investors that the country is back on track.