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Irish resisting EU bail-out pressure Irish resisting EU bail-out pressure
(40 minutes later)
The Irish Republic has insisted it does not need assistance from the European Union amid speculation it is under pressure to use the EU bail-out fund.The Irish Republic has insisted it does not need assistance from the European Union amid speculation it is under pressure to use the EU bail-out fund.
The country's government said it was in contact with "international colleagues", but denied it had made an application for help.
Reports suggest the Irish government may approach the European Financial Stability Fund (EFSF) for up to 80bn euros (£68bn; $110bn).Reports suggest the Irish government may approach the European Financial Stability Fund (EFSF) for up to 80bn euros (£68bn; $110bn).
But Dublin said such reports were "fiction".But Dublin said such reports were "fiction".
Irish difficulties are set to be discussed at a meeting of EU finance ministers in Brussels on Tuesday. Ireland's difficulties are likely to be discussed at a meeting of EU finance ministers in Brussels on Tuesday.
However, the BBC's Europe editor Gavin Hewitt said that high-level talks had already begun, involving European Commission President Jose Manuel Barroso and his economy commissioner Olli Rehn.However, the BBC's Europe editor Gavin Hewitt said that high-level talks had already begun, involving European Commission President Jose Manuel Barroso and his economy commissioner Olli Rehn.
"Some EU officials believe it would be better for the Republic to accept a bail-out package now rather than to allow uncertainty to continue," Gavin Hewitt said."Some EU officials believe it would be better for the Republic to accept a bail-out package now rather than to allow uncertainty to continue," Gavin Hewitt said.
"Brussels fears any delay risks repeating the Greek crisis that earlier this year threatened the entire eurozone.""Brussels fears any delay risks repeating the Greek crisis that earlier this year threatened the entire eurozone."
'Instability''Instability'
Irish bond prices were little changed in early trading on Monday. The price of Irish bonds - glorified IOUs sold by the government to fund state spending - were little changed in early trading on Monday.
Yields have soared in recent weeks as investors offload Irish debt, and there are market concerns that if the EU does not intervene, there could be contagion elsewhere in the eurozone. The yield on the bonds - which essentially represents the rate of interest the country must agree to pay in order to borrow new money - has soared in recent weeks.
And there are concerns that if the EU does not intervene, there could be contagion elsewhere in the eurozone.
Last week, anxiety over the Irish Republic spread quickly to other heavily indebted eurozone nations including Portugal and Spain, driving up their borrowing costs. Last week, anxiety over the Irish Republic spread quickly in the financial markets to other heavily indebted eurozone nations, including Portugal and Spain, driving up their borrowing costs.
And the shares of banks, including Royal Bank of Scotland, which have exposure to Irish government debt have fallen in the past week.And the shares of banks, including Royal Bank of Scotland, which have exposure to Irish government debt have fallen in the past week.
A spokesman for the Irish finance department said the country was "fully funded till well into 2011".A spokesman for the Irish finance department said the country was "fully funded till well into 2011".
Meanwhile trade and business minister Batt O'Keefe said the Republic must show it could "stand alone".Meanwhile trade and business minister Batt O'Keefe said the Republic must show it could "stand alone".
"It's been a very hard-won sovereignty for this country and this government is not going to give over that sovereignty to anyone.""It's been a very hard-won sovereignty for this country and this government is not going to give over that sovereignty to anyone."
However, Jim Power, chief economist at Friends First, said that "the reality is Ireland is now becoming a serious source of instability in the eurozone". However, Jim Power, chief economist at the financial services group Friends First, said that "the reality is Ireland is now becoming a serious source of instability in the eurozone".
"At the EU level, there will be a huge imperative to try and stabilise this thorn in the side and one way of doing that would be to force Ireland to access the EU fund," Mr Power added."At the EU level, there will be a huge imperative to try and stabilise this thorn in the side and one way of doing that would be to force Ireland to access the EU fund," Mr Power added.
Under procedures agreed in May, a eurozone country has to ask for help in order to trigger a bail-out.Under procedures agreed in May, a eurozone country has to ask for help in order to trigger a bail-out.
"Unfortunately, for those hoping to either prevent contagion - or to push through new rules regarding the crisis-resolution mechanism - Ireland has shown little interest so far in asking for assistance," said analysts at BNY Mellon."Unfortunately, for those hoping to either prevent contagion - or to push through new rules regarding the crisis-resolution mechanism - Ireland has shown little interest so far in asking for assistance," said analysts at BNY Mellon.
Cuts impactCuts impact
Since 2008, the Irish Republic has suffered the worst property collapse of all developed economies, with house values falling between 50% and 60%. Since 2008, the Irish Republic has suffered a dramatic collapse of its property market.
The Irish government has also all but nationalised the country's banking system, which had lent recklessly at an estimated cost of 40bn to 50bn euros, according to BBC business reporter Joe Lynam. House values have fallen between 50% and 60% and bad debts - mainly in the form of loans to developers - have built up in the country's main banks, bringing them to the verge of collapse.
The country has promised the EU it will bring its underlying deficit down from 12% of economic output to 3% by 2014. Its current deficit is an unprecedented 32% of gross domestic product, if the cost of bad debts in the Irish banking system is included. The Irish government has now all but nationalised the country's banking system, which had lent recklessly at an estimated cost of 40bn to 50bn euros, according to BBC business reporter Joe Lynam.
The Irish government, which has a flimsy majority in parliament, is set to publish another draconian budget on 7 December, which will make spending cuts or tax rises totalling 6bn euros, and aims to bring the deficit down to between 9.5-9.75% next year. The country has promised the EU it will bring its underlying deficit down from 12% of economic output to 3% by 2014.
Its current deficit is an unprecedented 32% of gross domestic product, if the cost of bad debts in the Irish banking system is included.
The Irish government, which has a flimsy majority in parliament, is expected to publish another draconian budget on 7 December.
This will impose spending cuts or tax rises totalling 6bn euros to bring the deficit down to between 9.5-9.75% next year.
Investors fear the budget cuts are likely to worsen the country's already deep recession, leading to further losses to the government via falling tax revenues and higher benefit payments.Investors fear the budget cuts are likely to worsen the country's already deep recession, leading to further losses to the government via falling tax revenues and higher benefit payments.
That parliamentary majority is likely to be cut to only two on 25 November, when a by-election will be held that the governing Fianna Fail party is likely to lose. The government's parliamentary majority is likely to be cut to only two on 25 November, when a by-election will be held that the governing Fianna Fail party is likely to lose.
The government had left the Donegal South West seat empty for 17 months but the Republic's second-highest court recently ruled that the delay was unreasonable. Three other by-elections are also required.The government had left the Donegal South West seat empty for 17 months but the Republic's second-highest court recently ruled that the delay was unreasonable. Three other by-elections are also required.