Creighton warns of new bailout

Tue, May 22, 2012, 01:00

Minister of State for Europe Lucinda Creighton has said there is "quite a strong possibility" Ireland will not be able to access international funding markets next year, and "may very well" need access to the European Stability Mechanism (ESM).treaty referendum.

Speaking at an event aimed at encouraging women to vote Yes in the fiscal treaty referendum this morning, Ms Creighton said the most important thing to consider was access to the ESM, "which we very well may need to access in 2013 and 2014".

She said Ireland would emerge from the funding element of the IMF programme next year. For the years 2014 and 2015 alone Ireland would have a funding gap of €36 billion, which she described as "pretty immense".

Ms Creighton said it was the Government’s intention and aspiration to not rely on "any form of bailout" and be able to return to borrowing on the international capital markets.

"But as every day goes by, and let’s be honest about this, the situation in Greece, the situation in Spain, with all of the uncertainties throughout the euro zone, it makes it much more difficult for that to become a reality," she said.

"So there is a possibility that we would not be able to access the markets in 2013 and we would face a funding cliff in 2014. That’s quite a strong possibility."

Ms Creighton said the ESM was "the only show in town".

Referring to Ireland’s 12.5 per cent corporation tax rate, she said Government negotiators fought very hard to keep all references to tax out of the treaty. She revealed that there was pressure from other countries to have the tax rate included in the text, "but we ensured that it was excluded from the treaty".

She claimed there would be renewed pressure for change in the event of a No vote. "The likelihood is that our corporation tax will come under attack if we have to go around with a begging bowl looking for funding for this State."

Taoiseach Enda Kenny, who arrived at the event after Ms Creighton had spoken, said passing the referendum would give Ireland access to money at low interest rates from the ESM if required. "Please God, we won’t have to," he said.

Mr Kenny said markets "do not react, they anticipate", and one rating agency had said if the treaty was rejected, a downgrading of the country could follow. He insisted there would be "no second chance" to secure a Yes vote in the  referendum.

The event was organised by Fine Gael TD Mary Mitchell-O'Connor and also addressed by Minister for Children Frances Fitzgerald and businesswoman Nicola Byrne. Ms Mitchell-O'Connor invited women from business, civic society groups and politics to attend and urged them each to persuade 100 others to vote Yes.

Meanwhile, six members of the Dáil technical group called for a No vote in the fiscal treaty referendum at a joint press conference in Dublin this morning. They said 11 of the 16 members of the group, including five ULA members, oppose the treaty.

It emerged this evening that Taoiseach Enda Kenny will address the nation live on TV this weekend about the European Fiscal Treaty.

The speech will take place on Sunday in response to Sinn Fein, which is holding its Ard Fheis at the weekend, when leader Gerry Adams is expected to argue against the treaty in his own live address.

A Government spokesman said the length of the Taoiseach’s speech will depend on how long Mr Adams speaks, in order to ensure both the Yes and No campaign are given the same airtime.