Kenny rejects call to cancel bailout

PULLING out of the bailout deal would deliver a “lethal injection” to the Irish economy, the Taoiseach has warned.

Enda Kenny delivered the stark warning as he appealed to EU partners to lower the interest rate on the country’s “heavy debt burden”.

The move came as it looked more likely a second rescue package will be needed for Greece, whose credit rating descended even further into junk with ratings agency Standard and Poor’s.

Mr Kenny insisted he has “no intention” of pulling out of the €85 billion EU/IMF rescue package claiming it would force the Government to reduce the deficit in one year — meaning sudden cutbacks amounting to €18bn.

On a visit to Google’s offices in Dublin, he rejected the argument by economist Morgan Kelly that Ireland should walk away from the deal or face bankruptcy.

“Politics is about people and their lives and their careers and their opportunities. That’s what I deal in and I’ve no intention of delivering a lethal injection into the Irish economy by trying to bridge the extent of the deficit in one year.”

The Taoiseach denied reports that a cut in the interest rate on the EU’s share of the loan to Ireland was a “done deal”. But he said it might be agreed to at next week’s meeting of EU finance ministers.

In a speech to the Dáil earlier to mark Europe Day, he said an interest rate cut would be a “meaningful and appreciated measure” from our EU partners.

It would be “strongly supported” by the European Commission, according to Ireland’s commissioner, Máire Geoghegan-Quinn who was visiting the Dáil.

She said “significant decisions” would be made next week and insisted there is “no pressure” on Ireland to change its corporate tax rate in exchange for a reduction of the interest rate.

The Taoiseach called for “a more flexible approach” from EU institutions in dealing with the problems of member states. While admitting “questions of sustainability will remain” over the country’s “heavy burden of debt”, he insisted that pulling out of the bailout deal is not the answer.

Mr Kenny said today’s jobs initiative would mark a “significant milestone in the Government’s plan to get Ireland working again”.

The initiative is expected to include work placements and school improvement and roadworks schemes to boost jobs in construction.