Bailout discussions continue over Ireland
Berry Fleming holds a placard in the main shopping area of Dublin, in Ireland. Fleming was made redundant from a leading retailer recently. Ireland's Finance Minister Brian Lenihan said Friday that the economy was well-funded until next summer and the government did not need to apply for aid from the European Financial Stability Fund.
TEXT OF INTERVIEW
JEREMY HOBSON: Ireland said this morning it is not in secret talks for a bailout from the European Union. Reports over the weekend said the country might need $110 billion from Germany and other European countries to stave off economic collapse. The Irish government is dealing with the same kinds of debt problems that Greece did earlier this year. And there are concerns that if Ireland doesn't pay back its loans the effects could ripple across the global economy.
Marketplace's Stephen Beard is with us live from London with more. Good morning, Stephen.
STEPHEN BEARD: Hello Jeremy.
HOBSON: Some mixed signals here but we do know that Ireland is in economic trouble. Why are they being so adamant that they don't need a bailout?
BEARD: They say the government actually doesn't need to borrow any more until well into next year. So it doesn't need the money. And there's a point of pride here. The Irish are proud that they bit the bullet, they cut their public spending, and unlike the Greeks they didn't go to Brussels begging for help. There's a great quote here from the trade and business minister. He says, "Ireland must show it can stand alone." He says, "We struggled long and hard for our independence. We're not going to surrender that independence."
HOBSON: Independence -- Stephen it sounds a little dramatic. Would they really be giving up their independence if they take a bailout?
BEARD: That's their fear. There were reports over the weekend that the French and the Germans want a quid pro quo in exchange for any bailout. They want the Irish to raise their corporation tax level from the current low level of 12 and a half percent.
HOBSON: Why are these corporate taxes coming into the equation here?
BEARD: This has been a long bone of contention. The French and the German believe it's unfair that Ireland, with low tax rates, can attract foreign corporations. French and German taxes are much higher. But the Irish say they're determined to hang on to this. This is how they attracted major American corporations like Intel, Pfizer and Dell to set up in Ireland. It's been one of the main pillars of Irish prosperity.
HOBSON: OK we'll be watching, thanks Stephen.
BEARD: OK Jeremy.
HOBSON: Marketplace's Stephen Beard in London.