Govt prepares to unveil €15bn savings plan tomorrow

The Government will put the finishing touches to a drastic €15bn savings plan today after An Taoiseach Brian Cowen defied calls for a snap election.

After a day of political drama that saw the junior coalition Green Party call for a general election ministers are expected to discuss the four-year rescue package before tomorrow’s publication.

An embattled Mr Cowen said last night he wanted to stay in power to pass the crucial €6bn savings in next month’s budget.

But despite opposition demands for an immediate election, he declared the drastic cuts were in the national interest.

The Greens had earlier stunned the Taoiseach by issuing a New Year deadline for a general election.

In response Mr Cowen said he planned to dissolve the Dáil in the new year.

The Taoiseach was dumped into the political crisis matching the country’s economic chaos less than 24 hours after the Cabinet signed off on a multi-billion EU/IMF bail-out – unaware his two colleagues in the Green Party, leader John Gormley and Eamon Ryan, spent Saturday plotting an exit strategy.

Mr Cowen denied he felt betrayed.

After an emergency meeting with Fianna Fáil Cabinet members in Government Buildings, the Taoiseach dismissed talk of a heave against him or that he had been pushed by the Greens into agreeing to go to the polls.

He said all colleagues had given him full support, including Mr Gormley.

Mr Cowen called for solidarity on the €15bn four-year road map to recovery due tomorrow and the estimated €90bn bailout loan from the International Monetary Fund and Europe.

The 150-page four-year plan will contain significant reforms to the tax system, with new levies in property and water on the cards and cuts to social welfare.

It was being inspected by experts from the IMF and European Commission.

Mr Cowen is coming under intense pressure to step down from within and outside his ruling Fianna Fáil party, with the opposition and two independent TDs demanding an immediate poll.

Several Fianna Fáil backbenchers have also warned that Mr Cowen’s time is up.

Speculation is intensifying that the Government may not make it to the New Year, with a razor-thin majority to pass the worst budget in the state’s history on December 7 and a by-election looming on Thursday.

Meanwhile, yesterday saw bank shares come under pressure in the UK and America amid the uncertainty over the details of the Irish rescue package.

The FTSE 100 Index ended nearly 1% lower, as investors fretted over the impact of the crisis on other lenders.

Part-nationalised Royal Bank of Scotland, which is seen as being the most vulnerable in terms of Irish lending through its Ulster Bank subsidiary, fell nearly 5% while shares in fellow taxpayer backed Lloyds Banking Group dropped 4%.

On New York’s Dow Jones industrial average, Wall Street heavyweights Goldman Sachs Group ended up down more than 3% and Bank of America 3% lower.

Fears the debt troubles would soon erupt in other embattled eurozone countries, such as Portugal and Spain, also dragged the euro lower against the pound and dollar before the currency rallied ahead of Mr Cowen’s statement.