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ECB cautions Lenihan

Jean-Claude Trichet, president of the European Central Bank (ECB), has warned the Government to remain on "permanent" alert for fear of it becoming too complacent about the economic challenge.

Mr Trichet praised the Government's efforts to restore order to public finances, but he issued a cautious response to Finance Minister Brian Lenihan's suggestion that the worst was over for Ireland.

"We all have to remain alert permanently ... but let me also add that the decisions, which have been taken by the Irish Government to put the house in order, have been very impressive," he said.

"I take it that they were right, and I take it that this is something which, of course, probably was what the Minister for Finance was alluding to."

Nomura political analyst Alastair Newton said: "The main lesson of Ireland is one that can't be repeated -- that it's best to start early.".

Separately, Mr Trichet said the ECB is now confident that the Greek government will manage to get its budget deficit under control.

"The ECB governing council approves of the medium-term goal that has been fixed by the [Greek] government to get back to less than 3pc of public finance deficit as a proportion of GDP in 2012."

Greece faces a raft of strikes after its government introduced spending cuts.