THE Irish banking sector may need up to €10 billion in additional capital on top of the €7bn already pledged by the state to the two major banks.
That’s one of the key findings in a report produced jointly by Davy, Goodbody and NCB Stockbrokers.
The production of a unified report was “unprecedented” said Bernard McAlinden, head of research and strategy at NCB, who launched the report in Dublin yesterday.
Though the difficulties facing us are very real, “the problems of the Irish economy have been overblown”, he said.
“We would argue to get through this we need transparency right across the economy, because we’re all going to take a hit.”
To ensure we retain “cohesion” among all sectors of the economy it is vital “there is fairness at the heart of what is being done”, he said.
“We need to define what poverty is and to guarantee that nobody is going to fall below the line.
“We’re not as rich an economy as we once were but we can afford not to have people genuinely poor.”
Eamonn Hughes of Goodbody said the banks could need a further injection of between e3bn and e10bn on top of the e7bn being pumped into the two major institutions.
Other issues needing to be addressed urgently are government spending and the raising of taxes.
Rossa White of Davy said on Tuesday the Government needs to slash spending by e7.5bn over the next few years and raise taxes by e5bn if stability is to be restored to the national finances by 2013.
Mr White said the focus has to be on spending cuts over taxation and he says cuts of e2.5bn next Tuesday combined with tax increases of e1.5bn offered the best solution.
The report said a property tax on second and overseas homes could pull in e2bn a year, while it also stressed that the size of the social welfare bill was “too big to ignore”.
Setting out their stall, the three stockbroking houses said the issues facing the economy were seriously challenging.
Dermot O’Leary, senior economist at Goodbody, said if the turnaround is to be achieved, the Government will need to initiate “bi-monthly” press conferences to fully update the nation on what’s happening and what is being achieved in relation to its key goals.
It was important also that the National Treasury Management Agency be given an “ambassadorial role” to spread the message internationally that the Irish economy has the ability to cope with the present crisis and to come out the other end stronger and better for the experiences it has been through.
Donal O’Mahony of Davy said Irish insolvency issues had been over exaggerated, which has led to an increase in the cost of funding.
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