IRELAND'S government has today urged parliament to approve a tough 2011 austerity budget which foresees €6bn (£5bn) in savings and must win passage for the country to receive emergency loans from the EU and IMF.
In a speech to parliament, Irish Finance Minister Brian Lenihan sketched out a series of spending cuts and tax hikes which include reductions in child benefits, pay cuts for public servants and changes to tax bands that target low-earners.
"The scale of this adjustment is demanding, but it demonstrates the seriousness of our intent," Lenihan said.
Prime Minister Brian Cowen needs to get his 2011 fiscal plan past parliament to access the first tranche of emergency aid and despite a razor-thin majority he is expected to win passage in a series of votes that begin Tuesday night.
"We need their support to break the vicious cycle that has threatened our national finances and our banking system," Lenihan said of the EU/IMF bailout, which has stirred outrage in the humbled former "Celtic Tiger".
Once all the resolutions underpinning the budget have passed early next year, Cowen, the most unpopular leader in recent Irish history, has promised to call an election he is widely expected to lose.
That means a new government, most likely a coalition of the centre-right Fianna Fail and centre-left Labour, will be tasked with overseeing €6bn in budget savings next year, which will hit an economy already smarting from a prolonged recession.
Both parties have said they will re-negotiate the terms of the bailout package agreed late last month. But in practice the opposition will have little room for manoeuvre, having agreed to the broad targets of the rescue plan.
City A.M. Reporter