Greek-style Austerity Measures in Ireland

Public Sector in Firing Line If Irish Bailout Sought

* IMF/EU would impose drastic cuts to public sector
* Deal protecting public sector pay may be ripped up
* Hike in corporate tax would be counterproductive
* Greece hikes VAT to 23 pct, Irish VAT at 21 pct

November 16, 2010

Reuters - Ireland's public sector workers face the risk of further wage cuts and redundancies and its "sacrosanct" low rate of corporation tax could be raised if Dublin seeks an international bailout, economists believe.

The European Central Bank and euro zone peers want Ireland to accept an aid package to prevent a destabilisation of the bloc but likely tough conditions attached would put Dublin on a collision course with trade unions and delay the economy's emergence from the worst recession in the industrialised world.

An EU source said any aid would be from both Europe and the International Monetary Fund (IMF).

"They want to quarantine Ireland. They want to take out the Irish problem," said Ray Kinsella, professor of banking and financial services at University College Dublin.

"IMF programmes are very drastic, particularly on the expenditure side. They will be looking particularly at the public sector in Ireland for savings."