Global media praises painful but decisive action

BUDGET REACTION:NO PAIN, no gain was the message among the international press as they assessed Ireland's third budget in just over a year.

"Oh the pain" read the opening line of the Financial Timescommentary on the Budget.

The article went on to commend Minister for Finance Brian Lenihan for grasping the nettle, acknowledging that Ireland “had little choice” as it had priced itself out of the market due to high wages and could not borrow or tax its way out of the problem.

It urged other euro-zone countries such as Greece, Spain and Portugal to follow Ireland’s example in tackling their deficits: “Dublin may get gored in the process, but Ireland is at least trying to follow the euro-zone rules,” it concluded.

The Wall Street Journalled its budget analysis with the announcement that the Government is to impose a €200,000 "domicile levy" on high earners. The newspaper quoted Martin Phelan of William Fry Tax Advisers, who said that the levy would raise little money and could lead to the closure of businesses and further unemployment.

The paper predicted that “the most painful budget in a generation” was likely to “please Brussels but alienate voters”. However, journalist Quentin Fottrell noted that: “Ireland faced an acute version of the difficult balancing act many governments are confronting in the wake of the financial crisis. If it didn’t cut enough, its debts would soar and rattle investors.”

Under the headline "Savage Cuts to save the ailing Celtic Tiger", the Daily Telegraphreported that British chancellor Alistair Darling had been given a "master class in savage spending cuts" by his Irish counterpart.

While the Budget had unleashed a “bloodbath” on the Irish taxpayer, the newspaper quoted Mr Lenihan’s assertion that, while tough times lay ahead, the recovery would begin if the taxpayer took their “medicine” now. It also reported the prospect of looming union strikes in the public sector, the Garda among them.

The Guardiannoted that the "slash and burn" budget had the aim of putting Ireland's house in order.

Meanwhile, in a sidebar to a page two article documenting the “painful tax rises” in the UK pre-budget report, the Independent noted that “It could be worse” before documenting some of the “swingeing cuts” in the Irish budget.

The financial website Bloombergsaid the Government had pledged to continue cuts to help calm investor concern that the country will struggle to pay its bills. It quoted economist Simon Barry of Ulster Bank, who said the Budget had caused "an awful lot of pain . . . but the reality is there is more to come".

It also quoted UCD economist Colm McCarthy who told RTÉ that if the Government stuck to its plans, “by the middle of the year, people ought to have at least begun to see the winning post”.

KBC economist Eoin Fahy was less optimistic. “This is only the beginning . . . we are faced with the prospect of another four or more budgets as tough as this one before we get even close to budgetary balance.”