This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7986862.stm

The article has changed 16 times. There is an RSS feed of changes available.

Version 5 Version 6
Irish braced for emergency budget Irish braced for emergency budget
(30 minutes later)
The Irish Republic's government is to unveil its second budget in six months as the economy contracts sharply. The Irish Republic is poised to unveil its second budget in six months as the economy contracts sharply.
Dublin faces the double challenge of dealing with a deepening recession while being forced to correct the worst deficit in Europe.Dublin faces the double challenge of dealing with a deepening recession while being forced to correct the worst deficit in Europe.
Unemployment is tipped to near 12% in 2009 and based on government forecasts the deficit could reach four times the level allowed by the European Union. Unemployment is already at a record high and government forecasts suggest the deficit could reach four times the level allowed by the EU.
The Irish emergency budget is likely to mean higher taxes and lower spending.The Irish emergency budget is likely to mean higher taxes and lower spending.
This is in contrast to other countries, which have been spending billions and cutting taxes as a means to economic recovery. This is in marked contrast to other countries that have been spending billions and cutting taxes in an attempt to stimulate their economies back to life.
The Republic's Taoiseach, or prime minister, Brian Cowen, primed his fellow citizens to expect bad news during a speech aired on YouTube: "The coming months and years we will be asking people to take the strain, to make more sacrifices," he said.The Republic's Taoiseach, or prime minister, Brian Cowen, primed his fellow citizens to expect bad news during a speech aired on YouTube: "The coming months and years we will be asking people to take the strain, to make more sacrifices," he said.
Model 'Difficult position'
The days of major foreign investments, especially from American technology companies, are over. Finance Minister Brian Lenihan was also preparing the public for what is likely to be an austere and unpopular budget.
Rows of cranes and empty office buildings are now all that is left of a building boom which fuelled the much admired 'Celtic Tiger' economy Irish crisis hits man and beast Rows of cranes and empty office buildings are now all that is left of a building boom which fuelled the much admired 'Celtic Tiger' economy Irish crisis hits man and beast
From the late 1990s economists were praising the Irish Republic as the model to follow. "I think everyone realises now that Ireland is in a very difficult position," he said. "There is an onus on all of us to pull together now for the sake of our country."
Multi-national firms were attracted to a European Union country where running costs were cheap and there was a highly skilled English-speaking workforce. It is a massive turnaround from the late 1990s, when economists were praising the Irish Republic as the model to follow.
As fewer Irish workers emigrated and foreign migrants flocked to share the state's wealth, demand for houses jumped. Multinational firms were attracted to a European Union country where running costs were cheap and there was a highly skilled English-speaking workforce. Demand for houses jumped, prompting a boom in construction.
That prompted a boom in construction which drove the economy forward. Tens of thousands of Irish people invested in properties overseas. The state's newspapers were full of advertisements selling apartments in places such as Bulgaria, Portugal and Spain.
Tens of thousands of Irish people invested in properties overseas.
The state's newspapers were full of advertisements selling apartments in places like Bulgaria, Portugal and Spain.
DownturnDownturn
Banks were only too willing to lend money for construction projects. Banks were only too willing to lend money for construction projects., which has come back to hit banks as the Irish government has been forced to bail them out.
But that strategy has returned to haunt Irish banks, as troubled construction firms now struggle to sell houses or land and the usual remedy of seizing the assets is risky because they have dropped in value. The fall-out of the global downturn has hit the country hard as troubled construction firms now struggle to sell houses or land. The usual remedy of seizing the assets is risky, because they have dropped in value.
The fall-out of the global downturn has hit the country hard and the collapse of the construction boom has sent the economy into a tailspin. This has led to widespread layoffs.
Austin Hughes, chief economist at the Irish arm of Belgium's KBC Bank, has watched the health of the Celtic Tiger deteriorate. "The government faces problems at home from people losing their jobs and internationally from financial markets, who are wondering if the Irish economy could eventually default," said Austin Hughes, chief economist at the Irish arm of Belgium's KBC Bank. "That isn't going to happen, but the government needs to show that it is prepared to take tough measures."
"The government faces problems at home from people losing their jobs and internationally from financial markets, who are wondering if the Irish economy could eventually default. That isn't going to happen, but the government needs to show that it is prepared to take tough measures," he said.
Recovery will be a long-term process and much will depend on sales by Irish companies abroad.
DeficitDeficit
Kick-starting exports is vital for the revival of the economy and a challenge for Enterprise Ireland, the state body that helps companies boost overseas sales. According to Enterprise Ireland director Stephen Hughes, who works for the state body that helps companies boost overseas sales, a recession brings opportunities.
Prime Minister Brian Cowen has warned that things will remain tough "Most of our companies are relatively small and nimble-footed and can move themselves around in their existing markets, indeed into other markets, with relative ease," he said.
According to Stephen Hughes, Enterprise Ireland's director for Northern Europe, a recession brings opportunities: "Most of our companies are relatively small and nimble footed and can move themselves around in their existing markets, indeed into other markets, with relative ease." The government in Dublin has reassured the power brokers in Brussels that it will not have to make an emergency dash for the IMF's cash machine, like its fellow EU members Hungary, Latvia and Romania.
We will learn more about the mettle of the Irish coalition government. Politicians know that raising taxes is not a vote winner but other options are limited. The EU has given the Irish five years to get the budget deficit under control, but the decision-makers in Brussels are watching carefully.
The Republic has to reduce its huge deficit and the taxpayers will be leaned on. Later this year, the Republic will hold a second referendum on the Lisbon Treaty, aimed at streamlining EU institutions to make the enlarged bloc of 27 states function better.
The government in Dublin has reassured the power brokers in Brussels that it will not have to make an emergency dash for the IMF's cash machine, like its fellow European Union members Hungary, Latvia and Romania. Europe's politicians are hoping Irish voters do not react to the recession and try to punish the government by killing off the a treaty that is considered key to the EU's future.
The European Union has given the Irish five years to get the budget deficit under control but the decision makers in Brussels are watching carefully.
Later this year the Republic will hold a second referendum on the Lisbon Treaty, aimed at streamlining EU institutions to make the enlarged bloc of 27 states function better.
Europe's politicians are hoping Irish voters do not react to the recession and try to punish the government by killing off the Treaty that is key to European Union's future.
Have you been affected by the issues covered in this story? What would you like to see in the budget? Send us your comments using the form below.Have you been affected by the issues covered in this story? What would you like to see in the budget? Send us your comments using the form below.
The BBC may edit your comments and not all emails will be published. Your comments may be published on any BBC media worldwide. Terms & ConditionsThe BBC may edit your comments and not all emails will be published. Your comments may be published on any BBC media worldwide. Terms & Conditions