€16bn deficit as tax take falls short

AS it was revealed collapsing tax takes punched a €16.4 billion black hole in State finances, homeowners were told to brace themselves for mortgage hikes after AIB reported massive losses.

Worse-than-expected Exchequer figures for July showed tax returns were €575 million below target as the predictions Brian Lenihan based his emergency April budget on veered badly off course again.

The bad news was compounded by a warning from AIB chief executive Eugene Sheehy that the bank is reviewing its mortgage interest rates after it posted a pre-tax loss of €900m for the first six months of its financial year as customer deposits fell 12%.