THE full cost of the 2008 banking crisis in Ireland will be laid bare today with the republic’s government expected to admit that bailing out Anglo Irish Bank will exceed €35bn (£30.2bn) – more than 20 per cent of Ireland’s GDP.
Ahead of today’s announcement, detailing the extent of a fresh recapitalisation, embattled Irish Prime Minister, Brian Cowen, yesterday conceded that Ireland had no choice but to act.
“Any Anglo failure would bring down the sovereign,” he said.
The bailout of Anglo Irish is being closely watched by the markets, as ratings agency Standard & Poor’s has already warned that if it tops €35bn it could put the country at risk of a further downgrade on its debt rating.
Ireland’s cost of borrowing, which reached a record high of close to 6.8 per cent on Tuesday, was again at near-record levels yesterday.
The European commission has tried to calm concerns that Ireland might need a Greek-style bailout, but European economic and monetary affairs commissioner, Olli Rehn has ordered the Irish government to set out specific budget reforms to achieve billions in savings by 2014.
“The government has shown consistently our preparedness to do what is necessary to ensure there is international confidence in the direction in which the economy is taking,” Cowen added yesterday.