Irish central bank says Ireland to be bailed out

The Republic of Ireland’s Central Bank governor has said that the expected bail-out loan will run into “tens of billions” of euros.

The final decision will be taken by the Irish government which has yet to comment.

Talks between the EU and the Irish government are to take place though Ireland is still denying asking the EU for help.

Many believe that a bail-out is necessary to prop up the country’s heavily indebted banks, including Spain and Portugal who have encouraged Ireland to take the EU loan in the interest of the euro and the European Union as a whole which will be threatened if the euro fails.

Irish banks have struggled since the collapse of the property market in 2008 when house values fell by 50 to 60% and bad debts from developers brought the banks to the verge of collapse.

The Irish government is proposing spending cuts of €6 billion to try to bring the defecit down from about 12% to between 9.5 and 9.75% next year, though it is feared that this measure may plunge the economy back into recession.