Irish government could collapse within days amid fears the controversial EU bailout could fall through.
Rogue independent MPs Jackie Healy Rae and Michael Lowry threatened to derail the estimated €90bn (£77bn) bailout by refusing to back the coalition’s austerity budget.
Any handout from Europe would depend on Ireland agreeing to meet a tough new round of budget cuts.
The government was also hit by coalition partner the Green Party dramatically announcing it will walk away from the partnership.
It called for a general election in January but said it will still vote in favour of the austerity cuts, set to be unveiled on on 7 December.
But even this support will not guarantee the success in the vote. Greens included, Brian Cowen’s party has the thinnest of margins – just three MPs – and a series of upcoming by-elections, the first on Thursday, could wipe out its advantage altogether.
With Cowen’s Fianna Fáil party looking almost certain to lose the seat, its grip on power is weakening fast.
If enough MPs vote against the bill it would almost certainly trigger an immediate general election, with Fianna Fáil unable to continue in government. This could cause Ireland to miss the deadline for receiving the Eurozone bailout.
“This scenario is unlikely,” Phyllis Reed, head of economic research at Kleinwort Benson said. “If the bill looked like it was in real danger of falling through, the opposition parties would thrash out a deal to make it pass. They both want the same broad outcome. If the austerity bill was out-voted then I suspect Europe would extend the deadline. Nobody wants to see Ireland go bankrupt.”
Cowen yesterday continued to defy calls for an immediate election, but pledged to trigger a poll in the new year once the emergency budget has been passed.