Europe

Dublin protesters march against cuts as bail-out looms

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Media captionThe march came as officials met to hammer out the final details of a financial bail-out

Tens of thousands of people have marched through Dublin in protest at the government's austerity programme.

Protest leaders said it was the first of many demonstrations over plans to raise taxes and cut public spending.

The austerity programme is designed to cut the Irish Republic's massive government deficit, exacerbated by the rescue of the country's banks.

The march came as officials met to hammer out the final details of a financial bail-out for the country.

The EU and the IMF are set to lend the country more than 85bn euros ($113bn; £72bn), with the terms of the deal expected to be announced on Sunday ahead of the markets re-opening on Monday.

State broadcaster RTE has reported that the interest rate to be paid on part of the loan could be as much as 6.7%, higher than the rate charged to Greece for its bail-out, which has raised concerns from opposition parties.

However, Communications Minister Eamon Ryan rejected the report, telling RTE radio: "I think that figure was inaccurate, and it was unfortunate because it did scare a hell of a lot of people."

The austerity package, announced on Wednesday by Prime Minister Brian Cowen, includes proposals to cut the minimum wage, slash the number of public sector jobs and increase taxes in order to save 15bn euros over the next four years.

'No support'

Organisers said more than 100,000 people took part in Saturday's protest, while the Irish police (Gardai) estimated that "in the region of 50,000" people marched to Dublin's General Post Office, site of the nationalist uprising against British rule in 1916.

A spokesman for the Irish Congress of Trade Unions president, Macdara Doyle, told the BBC that the protest was designed to send out a clear message: "We're trying to convince government and show government that there's no support for their plan amongst civic society and that every measure they have taken to date has been exactly the opposite of what they need to do.

What went wrong in the Irish Republic

The 1990s were good for the Irish Republic's economy, with low unemployment, high economic growth and strong exports creating the Celtic Tiger economy. Lots of multi-national companies set up in the Republic to take advantage of low tax rates.
At the beginning of 1999, Ireland adopted the euro as its currency, which meant its interest rates were set by the European Central Bank and suddenly borrowing money became much cheaper.
Cheap and easy lending and rising immigration fuelled a construction and house price boom. The government began to rely more on property-related taxes while the banks borrowed from abroad to fund the housing boom.
All this left Ireland ill-equipped to deal with the credit crunch. The construction sector was hit hard, house prices collapsed, the banks had a desperate funding crisis and the government was receiving much too little tax revenue.
The economy has shrunk and the government has bailed out the banks. A series of cost-cutting budgets have cut spending, benefits and public sector wages and raised taxes. But there are still doubts about future government funding.
The main concern for the Republic's economy is its banks, most of which are now controlled by the government. They have had to borrow at least 83bn euros (£71bn) from the European Central Bank because other banks will not lend to them.
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"Our fears about the new budget is that it's deflationary multiplied by ten. It's taking far too much money out of the economy and whatever possible chance there is of, some sort of growth taking hold in the economy will be killed by this proposed budget."

Mr Cowen's government insists the austerity plan and next month's budget are crucial steps to show fellow members of the 16-nation eurozone that the Irish Republic is putting its finances in order.

The BBC's Mark Simpson, in Dublin, says it is believed that Mr Cowen has now joined government ministers in talks with delegations from the International Monetary Fund and the European Union.

The money is expected to come from a number of different sources, with the IMF loan expected to be the cheapest money but European money likely to more expensive, particularly the money from the European Stability Facility.

Mr Cowen's coalition government suffered a setback with a by-election defeat on Friday which leaves the coalition government with a majority of just two.

Worries about the government's ability to push its budget through parliament on 7 December have further unnerved financial markets.