TIME LINE | IRISH DEBT CRISIS
Brian Cowen is elected Irish prime minister. His allies and opponents warn he faces a tough task steering the country through economic slowdown.
Ireland becomes the first euro zone country to slip into recession after its property bubble bursts.
Ireland agrees to inject €5.5bn (£4.6bn) into its three main banks, taking Anglo Irish Bank under its control.
Standard & Poor's downgrades Ireland's credit rating from prized AAA ranking to AA+ and warns it could drop further, in a vote of no-confidence in Dublin's efforts to get its public finances under control.
Irish finance minister Brian Lenihan outlines €10.6bn (£9bn) in spending cuts for 2010-2011 and forecasts additional €3.25bn from taxation in that period in emergency budget, the second in six months. Fitch also strips Ireland of its top AAA credit rating, reducing it to AA-plus.
Standard & Poor's cuts Ireland's long-term rating by one notch to 'AA-' and assigns the country a negative outlook.
Ireland discloses worst case price tag of over €50bn (£42bn) for bailing out its banks and announces it will have to make more budget savings.
EU Economics Commissioner Olli Rehn, visits Ireland and says he has not discussed any need for EU bailout, adding he believes market confidence would be restored once the country published its four-year plan to cut debt, which is set for release before a 25 November by-election.
Q & A : THE IRISH BAILOUT
Q.WHAT HAPPENS NOW?
A. The timeline is highly uncertain, which is in part what has fuelled market turmoil. Ireland is still denying that it is in need of a bailout, but many observers expect a capitulation within the week. A major point of interest will be the close of Eurozone finance minister negotiations today, with expectations that the talks could provide a framework for bailouts and suggest some general conditions for aid money in the future. In addition, Ireland is meant to be outlining a four-year plan for getting its deficit under control in the next two weeks. Much will depend on the credibility of the plan.
Q.CAN IRELAND AVOID A BAILOUT?
A. It is looking increasingly unlikely, although the Irish government is likely to continue to offer strong resistance due to the unpopularity of submitting to the conditions of any aid package. One possible alternative to a sovereign bailout could be a bailout of the banking sector, whose debts the government has guaranteed. However, most EU states would be reluctant to lend without channelling the money through the Irish government and subjecting it to strict conditions.
Q.WHAT CONDITIONS WOULD AID CARRY?
A.The EU could insist Dublin reneges on an agreement with public sector unions not to cut jobs or push through further wage cuts. Brussels may also demand Ireland raises its corporation tax rate, viewed as sacrosanct by Dublin, from its current low level of 12.5 per cent.
Q.WHY IS IRELAND NOT KEEN ON EU HELP?
A.An EU bailout would mean a big loss of face fiercely proud of its independence. It would also mean significant international interference in sovereign affairs.