Ireland is set to receive a bailout package of between £65bn and £75bn after European finance ministers agreed to a bailout yesterday evening.
The rescue package is an attempt to assist Ireland’s struggling banks and prevent a crisis spreading throughout the Eurozone.
The deal will not be concluded until the end of November because ministers are still working out the conditions attached to the package, which will include contributions from the UK and Sweden in the form of direct loans.
Speaking at a press conference yesterday, Ireland’s Prime Minister, Brian Cowen, said: “Irish banks will become significantly smaller… so that they can gradually be brought to stand on their own two feet once more.”
Ireland’s finance minister, Brian Lenihan, said the Government was seeking a “contingent fund, a standby facility of a very large sum” as well as budgetary support.
A cabinet meeting has been called to formulate a four-year budget to save the economy, which could involve up to around £13bn of spending cuts and tax increases over the next three years, according to the Financial Times.
Reports state that under the scheme, income tax will increase but the country’s corporation tax – currently 12.5 per cent – will not.