Europe

Irish leader Brian Cowen rejects calls for early budget

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Media captionBrian Cowen: ''We need to pass this budget as we said we would''

Irish Prime Minister Brian Cowen has rejected opposition calls to bring forward December's budget announcement to next week.

Mr Cowen is facing mounting pressure to quit and call an election because of a bail-out by the EU and IMF.

Addressing the Dail (parliament), he insisted there was no intention on his part to cling on to power.

Rather, he said the government had to wait for November's tax returns to ensure its figures were up to date.

On Sunday, EU member states and the International Monetary Fund (IMF) agreed to provide loans of up to 90bn euros (£77bn, $124bn) in an attempt to bring an end to the crisis surrounding the Irish Republic's debts.

Four-year plan

The taoiseach (prime minister) has already tried to persuade opposition leaders to delay an election until the 2011 budget - to be announced on 7 December - has been put into effect.

In that case, parliament is unlikely to vote on the budget until January, meaning an election could not take place until February or March.

But opposition leader Enda Kenny urged the prime minister to bring the budget forward to next week.

Mr Cowen argued that it was necessary first to put forward Wednesday's four-year financial plan in which proposals for 15bn euros in savings will be announced.

The government is likely to reduce social welfare benefits and the minimum wage in an attempt to cut the 2011 budget by 6bn euros.

"My sole motivation is to ensure that the four-year plan is published, as agreed with the people with whom we are dealing, and that a budget is passed by the House," he said.

Brian Hayes, Fine Gael's shadow finance minister, told the BBC that the opposition wanted to see the budget as soon as possible.

"The important thing, to bring real confidence back to this country, is ultimately for a change of government, a swift general election, and that those who led us into the mire, namely Fianna Fail over the past 14 years, will then be put into opposition," he said.

Mr Cowen announced on Monday that a general election would be held early next year. He was speaking after his government's junior coalition partner, the Green Party, called for an election in January.

But Fine Gael and the Labour Party called for an election as soon as possible and one party, Sinn Fein, has tabled a no-confidence vote.

Mr Cowen, leader of Fianna Fail, heads a coalition with a three-seat majority and faces a by-election on Thursday which it is expected to lose.

'There will be war'

Late on Monday, the Mr Cowen phoned Fine Gael leader Mr Kenny and Labour Party leader Eamon Gilmore.

Formally, Mr Cowen offered to make available to them the financial advice underpinning the proposed budget, the Irish Times reports.

But the phone calls signalled a first move in a strategy to persuade the opposition to let the budget pass, the paper says.

It is understood that both Mr Kenny and Mr Gilmore told Mr Cowen they wanted to see an immediate dissolution of the Dail with an election before, rather than after, the budget.

A number of TDs (members of the Dail) from Fianna Fail are meeting to discuss their own motion of no confidence.

One of them, John McGuinness, said: "There's serious discontent within the parliamentary party.

"I believe it's now up to those who've spoken out to take soundings amongst their colleagues to take action to remove that man [Mr Cowen] immediately."

What went wrong in the Irish Republic

The 1990s were good for the Irish Republic's economy, with low unemployment, high economic growth and strong exports creating the Celtic Tiger economy. Lots of multi-national companies set up in the Republic to take advantage of low tax rates.
At the beginning of 1999, Ireland adopted the euro as its currency, which meant its interest rates were set by the European Central Bank and suddenly borrowing money became much cheaper.
Cheap and easy lending and rising immigration fuelled a construction and house price boom. The government began to rely more on property-related taxes while the banks borrowed from abroad to fund the housing boom.
All this left Ireland ill-equipped to deal with the credit crunch. The construction sector was hit hard, house prices collapsed, the banks had a desperate funding crisis and the government was receiving much too little tax revenue.
The economy has shrunk and the government has bailed out the banks. A series of cost-cutting budgets have cut spending, benefits and public sector wages and raised taxes. But there are still doubts about future government funding.
The main concern for the Republic's economy is its banks, most of which are now controlled by the government. They have had to borrow at least 83bn euros (£71bn) from the European Central Bank because other banks will not lend to them.
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According to the lead story in Tuesday's Irish Independent, Mr Cowen's days as Fianna Fail leader were "numbered despite his pledge to limp on in power".

"I predict murder at the parliamentary party [meeting]," one unnamed backbencher told the paper.

"There'll be war there. I know there will."

Sinn Fein looks set to win Thursday's by-election in Donegal South West.

Meanwhile, opinion polls suggest Fianna Fail's traditional rival Fine Gael now has the biggest support nationwide.

According to a poll published on Sunday, Fine Gael has 33% and Fianna Fail 17%, while Labour has 27% and Sinn Fein 11%.

The crisis in the Irish Republic was brought on by the global recession and almost total collapse of the country's banks.

Once known as the Celtic Tiger for its strong economic growth - helped by low corporate tax rates - the country experienced a property bubble burst, leaving its banks with huge liabilities and pushing up the cost of borrowing for them and the government.

What do you think of the bail-out? What kind of conditions should be attached to it? Are you in the Irish Republic? How does the current economic situation affect you? Send us your comments using the form below.

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