Commission favours deal with bondholders

The European Commission is in favour of Ireland asking subordinated bondholders in Anglo Irish Bank to share some of the cost of winding down the nationalised lender, competition commissioner Joaquin Almunia said today.

"This is in line with the Commission's principles on burden sharing since it both addresses moral hazard and limits the amount of aid, with benefits to the taxpayers," Mr Almunia said in a statement.

The commissioner said the restructuring of Anglo Irish into an asset recovery bank and a funding bank, which will not lend, addressed competition concerns.

"Once the commission receives the details of the (Anglo) plan, it will proceed rapidly towards taking a final decision," he said.

Elsewhere, German deputy economy minister Bernd Pfaffenbach has said Ireland's plan to narrow the fiscal deficit "seems doable."

In a speech in Dublin, he said the Irish numbers are "awful" at the moment but added that the country should be able to get out of the financial crisis without having to resort to external help.

In a separate interview with RTÉ, Mr Pfaffenbach said the EU would assist Ireland if required.

"Of course, if it is necessary it's ready and we would be prepared to be helpful and the Europeans hopefully would be prepared to help," he said.

"I would be surprised given all the efforts that the politicians here in Ireland are doing at the moment and the understanding of the people and their co-operation," Mr Pfaffenbach added.

Mr Pfaffenbach is in Dublin for the German Day event at UCD, which is also being attended by Taoiseach Brian Cowen.

A new survey published to coincide with the event reveals that 50 per cent of companies in Ireland represented by the German-Irish Chamber of Industry and Commerce believe the country has become more competitive over the past three years.

The study shows that half of the organisation's members intend to increase employment here in the next two years, while 40 per cent plan further investments.

However, 56 per cent of companies said they believe the minimum wage is high by international standards and is impacting on competitiveness.

The chief executive of the German-Irish Chamber of Commerce, Ralf Lissek, said that German companies seem to be adopting a more cautious assessment of Irish economic prospects in the coming years.

“The forecasts for Irish economic growth from our members – 1.2 per cent in 2011, 2 per cent in 2012 and 2.6 per cent in 2013 – are more conservative than forecasts from other research institutes and economic commentators. But this reflects the views of those working at the coalface of business between Germany and Ireland,” he said.

The organisation's survey found that 75 per cent of member firms believe that it is important for German companies to have an actual presence in Ireland if they want to be successful in the Irish market.

Additional reporting: Reuters/Bloomberg