Ditching sunny outlook ‘saves Ireland’s bacon’

Ireland will trim its growth forecasts this month but looks set to avoid having to impose fresh austerity measures to appease its international lenders — at least for now.

Thanks to its realistic initial forecasts, the country has avoided the kind of politically damaging rounds of emergency spending cuts and tax hikes that have sparked angry demonstrations in Portugal and Spain. It has also stayed ahead of its deficit-cutting targets.

Analysts say Ireland may eventually seek more time or harsher medicine to keep its deficit-reduction plans on track, particularly if it fails to win a deal to ease the burden of State-owned bank debt or get economic growth to accelerate over the next 12 months.