€80 billion EU bailout on the horizon

AN EU bailout of up to €80 billion was in the offing for Ireland today as the Government struggled to remain in control of economic sovereignty.

It is believed most of the money would be aimed at propping up the country’s ailing banks.

Senior European Central Bank officials revealed ongoing talks between the EU and Dublin. With Brian Lenihan in Brussels for crunch meetings with fellow finance ministers, the next 24 hours are expected to be crucial for the State.

Despite ministerial dismissals of talks with the EU as “fiction” in recent days, Brian Cowen confirmed contacts were on-going, though he insisted the Government did not need financial assistance but was discussing how best to underpin financial stability. When pressed on whether he expected Ireland to seek financial support from the EU, Mr Cowen said: “We are engaging constructively with partners.”

Spain’s ECB representative and the governor of the country’s bank Miguel Angel Fernandez Ordonez said it was up to Ireland to take a final decision on its fiscal crisis.

Ministers indicated the four-year economic blueprint would likely be made public next week in an attempt to calm turmoil in the markets.

If an EU deal is agreed it is expected the money would be used partly to recapitalise Allied Irish Bank and Bank of Ireland, which have been unable to raise money on the markets.

Sources in Brussels said the proposals see two-thirds of the funds coming from the European Commission and one-third coming from the IMF.

They suggested Ireland would not access money from the European Economic Stability Fund, which involves all the eurozone states, and this could be seen as a way of meeting Ireland’s demand that its sovereignty would not be impinged on.

Any such loan would stabilise the banking sector and have the immediate effect that the country would not have to return to the markets for some time to raise money.