Irish government set to take drastic action
The Irish authorities have this evening signalled a significant change in the future funding of Irish public services and amendments to tax rates and tax allowances. The move comes with news that the government needs to save between €3.5 billion and €4 billion a year from the Irish budget. The situation is worse than many predicted with a deficit of €23 billion forecast for this year which would be an incredible 12.75% of gross domestic product.
While initially it seemed as though public services would take the brunt of the radical changes, it now appears as though tax increases will be grabbing headlines over the next few months. Anyone who has monitored the Irish economy will be well aware of the significant troubles within the banking sector as well as a sharp decline in the economy as a whole. Various initiatives have so far failed and despite repeated denials that an IMF bailout is on the cards, nobody has yet written off this particular option.
The debt figure, which equates to 12.75% of gross domestic product, is the worst in Europe and even beats the UK figure. With suggestions that the UK government may be ready to hold informal talks with the IMF it seems inevitable that this path will need to be considered carefully by the Irish authorities.
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