Fears German coalition may try to force Ireland to raise Corporation Tax

It is feared Ireland's low rate of Corporation Tax could be in the firing line as Germany works to form a new coalition.

It is understood Angela Merkal's Christian Democratic Party has come to blows with the the Social Democratic Party over the rate.

Reports suggest that the party are demanding Merkel force Ireland to up the rate of 12.5%.

Quentin Peel, associate editor with the Financial Times and Germany Correspondent based in Berlin, said while rates are safe for now, it may become an issue in the future.

Mr Peel said: "What they have, at least this is the argument of the opposition here (in Germany), is the right to agree whether or not they put up further money for Ireland and the conditions on which they do that.

"They might try and set conditions that say 'look, you've got to take certain actions in Ireland in order to qualify for this money', so it would be a back-door way of trying to force the issue."