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Eurozone to 'intensify' work to help Irish Republic Eurozone to 'intensify' work to help Irish Republic
(40 minutes later)
Plans are being made for a potential rescue programme to bail out the Irish government, if it asks for help, the EU's finance commissioner says.Plans are being made for a potential rescue programme to bail out the Irish government, if it asks for help, the EU's finance commissioner says.
Olli Rehn told reporters the plan would have an "accent on restructuring its banking sector".Olli Rehn told reporters the plan would have an "accent on restructuring its banking sector".
His statement came at the end of an emergency meeting of eurozone ministers and financial institutions in Brussels.His statement came at the end of an emergency meeting of eurozone ministers and financial institutions in Brussels.
Finance ministers from all the 27 European Union countries are set to meet shortly.Finance ministers from all the 27 European Union countries are set to meet shortly.
Tuesday's emergency talks came against a background of renewed financial market turmoil.Tuesday's emergency talks came against a background of renewed financial market turmoil.
At the centre of this has been the markets' fear that the governments of the weaker eurozone countries - particularly the Irish Republic - would not be able to afford to repay their huge debts.At the centre of this has been the markets' fear that the governments of the weaker eurozone countries - particularly the Irish Republic - would not be able to afford to repay their huge debts.
Mr Rehn said that "the Irish authorities are committed to working" with the EU, the European Central Bank and the International Monetary Fund to calm market turmoil.Mr Rehn said that "the Irish authorities are committed to working" with the EU, the European Central Bank and the International Monetary Fund to calm market turmoil.
A statement by the eurogroup following its meeting praised the Republic of Ireland's efforts to combat its problems: "The Eurogroup welcomes the significant efforts of Ireland to deal with the challenges it faces in the budgetary, competitiveness and financial sector areas."
'Short and focused''Short and focused'
A statement issued after the meeting praised the Republic of Ireland's efforts to combat its problems: "The Eurogroup welcomes the significant efforts of Ireland to deal with the challenges it faces in the budgetary, competitiveness and financial sector areas."
The statement said the Irish government would engage in a "short and focused consultation" with the Commission, the ECB and the IMF in order to determine the best way to provide any necessary support.The statement said the Irish government would engage in a "short and focused consultation" with the Commission, the ECB and the IMF in order to determine the best way to provide any necessary support.
It concluded by adding "We confirm that we will take determined and co-ordinated action to safeguard the financial stability of the euro area, if needed, and that we have the means available to do so".It concluded by adding "We confirm that we will take determined and co-ordinated action to safeguard the financial stability of the euro area, if needed, and that we have the means available to do so".
The IMF welcomed the Republic of Ireland's decision to allow a "short and focused consultation" to decide if the country needs a budget bailout.The IMF welcomed the Republic of Ireland's decision to allow a "short and focused consultation" to decide if the country needs a budget bailout.
Mr Rehn called the Irish Republic the most pressing challenge of today, adding that there was "an intensification of preparations of a potential programme in case it is requested" but the meeting proposed no concrete course of action.Mr Rehn called the Irish Republic the most pressing challenge of today, adding that there was "an intensification of preparations of a potential programme in case it is requested" but the meeting proposed no concrete course of action.
'No support''No support'
The Irish government has repeatedly denied that it is seeking outside support.The Irish government has repeatedly denied that it is seeking outside support.
Earlier on Tuesday, Prime Minister Brian Cowen told parliament that he had not asked for bail-out money and that the Irish economy was well funded until next year.
On Tuesday, Prime Minister Brian Cowen told parliament that he had not asked for bail-out money and that the Irish economy was well funded until next year.
He said his country was working with European partners to deal with the debt issue, but that his country was neither "immune or unique" amid the recent economic crisis.He said his country was working with European partners to deal with the debt issue, but that his country was neither "immune or unique" amid the recent economic crisis.
Irish finance minister Brian Lenihan said European authorities had welcomed the steps taken to date by the Irish government.
"What they are saying and what we are saying, what all the finance ministers are saying, is that we have to work together to resolve these market difficulties," he said.
Earlier, Mr Rehn warned that Europe must "resist alarmism" amid the latest fears over Irish debts.Earlier, Mr Rehn warned that Europe must "resist alarmism" amid the latest fears over Irish debts.
Mr Rehn, speaking after the talks finished said the EU would, however, step up work on support for the Republic "with an accent" on its banks. Mr Rehn, speaking after the talks had finished, said the EU would, however, step up work on support for the Republic "with an accent" on its banks.
'Survival crisis'
Earlier on Tuesday, the EU Council president, Herman Van Rompuy, warned that if the euro failed, so too would the EU.
However, he added he was "very confident" the problems could be overcome.
Uncertainty has caused the cost of Irish, Portuguese and Spanish government borrowing to rise significantly over recent weeks.
Rising yields are not an immediate concern for Ireland, as it does not need to borrow money on the markets this year.
But it is for countries such as Spain, which held an auction of government bonds earlier, and other countries facing large deficits.
The Spanish treasury secretary called on Dublin to act quickly to end market uncertainties.
Portugal's Finance Minister Fernando Teixeira dos Santos has urged Dublin to do the right thing for the euro and accept a bail-out.
Meanwhile, concerns were raised about the eurozone's bail-out of Greece after Austria said Greece had not fulfilled its obligations under the EU-backed aid package. Austria has yet to submit its December contribution to the package.Meanwhile, concerns were raised about the eurozone's bail-out of Greece after Austria said Greece had not fulfilled its obligations under the EU-backed aid package. Austria has yet to submit its December contribution to the package.
This followed the release of figures on Monday showing that Greece's budget deficit was worse than previously thought.This followed the release of figures on Monday showing that Greece's budget deficit was worse than previously thought.
Solidarity sought
The BBC's business editor Robert Peston said that much hinged on the stance of the European Central Bank (ECB) - which has propped up the Irish Republic's banking system with loans it could not get on the money markets.
"Without the financial support of the ECB, Ireland would be bust right now," he said.
"But if there is the faintest sign that the ECB wants to withdraw the succour it has provided to weak eurozone banks, Ireland will no longer have a choice, it will have to go cap in hand either to its EU partners or to the IMF."
There are a range of funds which troubled nations could access - including the European Financial stability facility - 440bn-euro (£372bn) pot of money set up to aid eurozone countries that run into debt difficulties.
And while the UK is not part of the eurozone, its taxpayers could end up footing some of the bill for any bail-outs.
For example, there is the European Financial Stability Mechanism - a 60bn-euro, EU-wide scheme, which countries can draw on and to which the UK contributes 12%.
Also, if the International Monetary Fund (IMF) is asked to step in, the UK would fund 4.5% of any aid.
Budget brought forward?
Irish banks have struggled since 2008, when the Republic suffered a dramatic collapse of its property market.
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.
Reports suggest the Republic will try to reassure markets by bringing forward details of its four-year financial plan to next week.
The proposals will be severe. It has said it will impose unprecedented spending cuts or tax rises totalling 6bn euros (£5bn) to try to bring its underlying budget deficit down from about 12% to between 9.5 and 9.75% next year.
While intended to boost confidence in the country's finances, investors fear the budget cuts could plunge it back into recession, leading to further losses to the government via falling tax revenues and higher benefit payments.