Deal will see budget cuts eased by €1bn

The impact of the next two budgets will be eased by €1bn as a result of the bank debt deal, which was hailed as a “historic step” by Taoiseach Enda Kenny.

The deal was announced in the Dáil following a meeting of the Cabinet and an all-night sitting of the Oireachtas to push through legislation to wind down the former Anglo Irish Bank.

To sustained applause from the Government benches, Mr Kenny said “step by step” his administration was “undoing the disastrous banking policies that brought this State to the brink of national bankruptcy”.