Irish MPs warn of pension cut red line

City A.M. Reporter
IRISH government lawmakers have warned the country’s finance minister Brian Lenihan that he will fail to push the 2011 budget through parliament if it includes public sector pension cuts.

Lenihan is set to step up Ireland’s austerity drive by unveiling €6bn (£5.24bn) in spending cuts and tax hikes in the toughest budget on record on 7 December. But with a parliamentary majority of just three, he needs 80 of the government’s 82 MPs to back the plan.

Several of them said they could not support a reported €7 cut to the €230-a-week state pension, mindful of the 15,000 pensioners, dubbed the “grey army”, who marched on parliament two years ago when Lenihan tried to means test their medical allowances.

“If there is any cut to the OAPs (old age pensions), then the budget won’t pass,” Chris Andrews, a member of Lenihan’s Fianna Fail Party told an Irish newspaper.

Lenihan also needs to secure the support of two government-supporting independent MPs and the six lower-house members of junior partner The Greens.

Ireland cancelled its remaining bond auctions for 2010 in September, hoping that a four-year fiscal plan – due to be published this month – and the passing of December’s budget would reduce its cost of borrowing.

However, borrowing costs breached record highs in successive days last week.

“I will be talking to colleagues about how we will vote, on the basis of one overwhelming consideration, the national interest,” Fine Gael MP Jim O’Keefe said.