Ireland 'Could Leave Euro In 2010'

A leading UK bank has claimed Ireland could be the first country to leave the European Union due to its financial difficulties.

The Standard Bank Plc said Ireland was among countries in an "intolerable" economic situation, which could lead to bailouts and exits from the euro region before the end of 2010.

Steve Barrow, Head of Foreign-exchange Strategy at the London bank wrote in a note today: "We question the ability of countries like Ireland and Greece to grow out of the current crisis.

"With interest rate cuts, exchange rate depreciation and significant fiscal support all off limits for these countries, it seems likely that bailouts - or even pullouts from EMU — are likely before the end of 2010."

However, speaking last night in Brussels, Taoiseach Brian Cowen said the cost of Ireland's borrowing will go down as international financial markets absorb the implications of the Budget.

Mr Cowen expressed confidence that the rates applying to Ireland would fall once the markets 'acquaint themselves' with the scale of the Government's actions.

He said that the reaction of the international markets to ongoing developments was an indication of the need to instil confidence in the direction the country is going.

"I think it has been well received internationally," said the Taoiseach.

"It can't determine totally our policy, but it is an important consideration for the country getting access to funds as we make this adjustment over the next few years."

He said one of the purposes of the Budget was a determination to show that the Irish people could manage their own affairs and do whatever was necessary to stabilise the deficit.

"Having stabilised it and having sought to protect to the greatest extent we can the more vulnerable people in society, we now proceed to work for recovery. I think it has been well received in that respect, and well received at home, too," said Mr Cowen.

(DW/BMcc)