Business

The Irish budget: The nightmare before Christmas

Image caption The Irish finance minister Brian Lenihan is expected to unveil the toughest budget in the country's history on Tuesday

The Irish finance minister, Brian Lenihan, is expected to unveil the toughest budget in the country's history on Tuesday afternoon.

It will also be the first since the European-IMF bail-out loan announced last month.

BBC Northern Ireland's Dublin correspondent Shane Harrison looks at some of its possible consequences.

The Irish have gone from worrying about bad economic forecasts to dreadful weather forecasts because of a particularly sharp cold spell.

On Tuesday afternoon, many could be forgiven for fearing a return of the economic locusts in the form of one of the toughest budgets in Ireland's history.

The finance minister, Brian Lenihan, is attempting to take 6bn euros out of the economy by raising taxes and cutting spending.

That is roughly a fifth of the country's annual tax take.

Low paid workers and those on social welfare - apart from old age pensioners - will be among the worst hit.

The minimum wage will be cut by one euro.

Emigration

Michael Donohoe, a bicycle courier who depends on commission, and earns about 16,000 euros a year is one of those who will be affected.

He is concerned about the suggestion that the roughly 50% of workers who pay no tax will be brought into the tax net.

He said: "With the lowering of the tax bands, low-paid workers like myself will be put into a situation where we'll be not be able to pay basic bills anymore like accommodation.

"It means I may have give up this job and do something else, maybe get out of the country."

The science minister, Conor Lenihan, a brother of the finance minister, emigrated himself during the 1980s.

He believes the budget is the first in a series of four aimed at restoring the country's finances to good health.

The pain, he argues, is being front-loaded to reassure international markets that Ireland is serious about addressing its problems and closing the 19bn euro gap between money raised and spent.

He says: "Nearly half of the people here don't pay any tax.

"So, the key challenge then is to bring them into the tax net but also at the same time cut back on public spending so that we can convince the markets and investors watching abroad that we are in control of our finances."

That's not a view shared by many people on the state's pay roll.

Living standards

Out in the cold, just off a snow and ice covered O'Connell Street, Dublin's main thoroughfare, Feargal Brougham, a school teacher, says the government is attacking the poor and middle income earners while being reluctant to make the rich pay.

He reckons he has already had an 18% pay cut over the last two years and expects a further 10% for this year after the budget.

Image caption The Irish economy has suffered one of the deepest recessions in Europe

He says: "I've a couple of kids. I've a large mortgage. I've childminding. My wife's a public servant as well. Foreign holidays will have to go.

"It's going to be very difficult to maintain our standard or any standard of living."

But new public servants will be even worse off.

That's because they will have starting salaries 10% less than current ones.

Not an enticing prospect for the the likes of Barra Roantree, a final year economic student at Trinity College Dublin, who'd like to work in either the Department of Finance or the Irish Central Bank.

"The 10% pay cut for new entrants only is unappealing. It seems particularly unfair when old age pensions are not being touched and when there's a lot of talk of inter-generational solidarity," he says.

Another bleak view that is not out of place with the current bleak Irish weather.

So, just out of interest, what do locusts look like?

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