By David Meilton
The meltdown in the Irish economy has forced the Dublin government to bring in an emergency Budget imposing a €3.3bn (£3m) package of spending cuts and tax rises.
The meltdown in the Irish economy has forced the Dublin government to bring in an emergency Budget imposing a €3.3bn (£3m) package of spending cuts and tax rises.Introducing the Budget on April 7, Finance Minister Brian Lenihan said Ireland faced ‘the challenge of [its] life’. The tax rises included a levy of 4% of gross income on anyone earning over €75,000, rising to 6% for those above €175,000. A VAT increase imposed last autumn was maintained, and excise duty on diesel was raised.
Lenihan predicted that the economy, previously forecast to experience a 6.75% contraction this year, would shrink by even more, 7.7%, with a projected further slump of 2.9% in 2010.
He also announced the creation of a new agency to buy up toxic assets from Ireland’s banks, to be swapped for Irish government bonds, in a bid to refinance the banks.
He acknowledged this would ‘result in a very significant increase in gross national debt’, but said the the public sector wage bill had been cut as a result of a controversial pensions levy imposed last year.
