Ireland announces austerity plan amid continuing EU debt concerns

The Irish government announced its austerity plan today which aims to save the country 15b euros over the next four years.

In addition to spending cuts, the minimum wage in Ireland will be reduced by 1 euro, to 7.65 euros an hour.  Over 24,000 public sector jobs will be cut and a new property tax will be introduced which will cost most homeowners up to 200 euros by 2014.

Ireland’s VAT is also set to rise from 21% to 22% in 2013, with additional increase to 24% in 2014.

It is hoped that the news plans will save the state the 15b euros (£13bn).  This will be in addition to the estimated 85bn euros secured through the EU’s bail out package.

The announcement came just several hours after Ireland’s credit rating was downgraded two notches by Standard & Poor in a reflection of the country’s debt-laden economy.  It was warned that further downgrades might also be possible.

The eurozone crisis has continued to affect markets with the FTSE-100 performing erratically in reflection of falling share prices.

The euro has also been volatile, falling 1.9%lower than the US dollar.

Germany’s Chancellor Angela Merkel commented on Tuesday that the euro was in an “exceptionally serious situation” due to the EU’s economic crisis.

Fears that the EU bail out will not be enough to settle the European economy have been compounded by falling markets and the withdrawal of investments.

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