Debt deal 'no threat' to coalition

Senior Government figures have put the viability of the Coalition on the line, as well as key strands of its economic policy, in talks on the Anglo debts. Such concerns are being taken seriously in Brussels, where officials acknowledge warnings from Dublin about a potential threat to the Government.

Expanding the argument to ease the burden of Anglo's debt, Government figures have let it be known in talks that failure to reach a deal could put the Coalition at risk.

Government figures are also making the case that it would be very difficult to agree more cuts in the next budget if no deal is struck.

Separately, Minister of State for Health Alex White said it would be a lot more difficult to achieve a new Croke Park deal on public service pay without a promissory note deal.

Mr Gilmore's spokeswoman would not deny or confirm a Sunday newspaper report which said he had told several European figures in Chile last week that the Coalition could fall if there is no deal, saying the discussions were private.

The Tánaiste met the European Parliament's Multiannual Financial Framework (MFF) negotiating team in Brussels this morning. Asked beforehand by reporters whether he had told the German chancellor that the Coalition was in danger of collapsing if a deal could not be reached on the promissory note issue, Mr Gilmore said: "Well the future of the Irish Government is a matter for the Irish Government and the Irish people. This is a critical period of time for the negotiation on the promissory notes and what the Government is seeking to do is to secure the best deal for Ireland and for the Irish taxpayer."

However, a ranking official in Brussels acknowledged high-level signals from Dublin that any failure to reach agreement with the ECB could jeopardise the continuation of the Coalition."I am aware that this issue has been raised by the Irish because there is such a strongly held view that something must be done," the official said.