Noonan warns of effect on Ireland

IRISH REACTION:MINISTER FOR Finance Michael Noonan has said the relative small size of Ireland to the major players at the centre of the current global financial turmoil leaves the country vulnerable to shocks elsewhere.

“We are always a small player in these events and we can be dragged back down by external forces,” said Mr Noonan, when describing the potential impact of double-dip recession fears in the US and the crisis affecting major euro zone countries such as Italy and Spain.

Mr Noonan said the Government was monitoring the situation though there was “nothing directly we can do” to influence the wider problem.

Speaking on RTÉ, he said Ireland was reasonably well positioned, since European leaders had agreed to reduce the interest rate on Ireland’s bailout package.

He also said that the crisis may present opportunities for Ireland.

“There are opportunities too. When [Taoiseach] Enda Kenny renegotiated the Irish bailout programme there were other policy items that we were advancing [but] we did not get them across the line.

“If another round of talks about Europe and the advancement of fiscal policy occurs in early autumn we have a number of policy items to table there, and if they are successful they will be to the benefit of Ireland.”

Asked to specify those items he referred to the eurobond issue. He said he would like discussion on them but that a system of guarantees from the European Financial Stability Facility would suit Ireland better, and would allow Ireland return to the markets.

A spokeswoman in his department said the Government would also raise the issue of burden-sharing for senior bondholders in Anglo Irish Bank and Irish Nationwide in those talks. The two institutions were in “work-out” mode, said the spokeswoman, and the Government intended to argue that they represented unique and exceptional cases.

Mr Noonan also said that a double-dip recession could have a negative impact on Irish growth rates. He said that four or five variables would determine the extent of the correction in the budget and whether it would amount to €3.6 billion or more.