Declining Ireland, last night announced the latest scale of 150 billion euros in fiscal austerity plan. The same time, official sources said the European Union (EU) may be given to Ireland about 850 million euros aid.

The plan for the euro a boost, however, Portugal, Spain and other countries with similar problems, the euro and the euro zone is still being tested.

Over the past week, the Irish Prime Minister Brian Cowen is a dramatic week. He once insisted that does not require external assistance, but the final on Sunday under pressure from the European Union and the International Monetary Fund (IMF) for help, but in exchange for today’s domestic political crisis, exacerbated the market panic, and the rating agencies, “adding insult to injury” .

Austerity plan with the EU assistance

In order to solve the debt crisis of Ireland, the international emergency relief funds needed about 850 million euros.

Since then, the Irish government announced a four-year, the amount of 150 million euros (20.55 billion U.S. dollars) of fiscal austerity plan, which cuts spending 10 billion euros, 50 billion euros to raise revenue. The goal is to share in the 2014 budget deficit to GDP ratio decreased 3% in line with EU requirements.

Irish government vowed to maintain the current corporate tax of 12.5% unchanged, but said the four-year financial plan will be increased through the reform of EUR 1.9 billion in personal income tax revenue. Also plans to present 21% of the value added tax in 2013 raised to 22%.

In addition, to cut 24,750 public sector jobs and reduce the public sector 10% of the salary of new employees. Will cut a total of 1.2 billion euros of public sector wages and social benefits to slash 2.8 billion euros.

The announcement of the proposal, a slight rebound in the euro exchange rate, as of 23:20 last night, Beijing time, the euro was reported to 1.3387 against the dollar.

Spread of the crisis

Ireland announced its acceptance of external assistance as investors shifted focus to more government financial problems also exist in Portugal and Spain, and other euro zone countries.

Portugal and Spain on Wednesday sovereign bond credit default swaps hit record highs. S & P rating was lowered, the Irish 5-year Treasury CDS index also rose by 16 basis points to 595 basis points. Market analysts pointed out that this may be another round of weak euro zone started.

French bank in the Nov. 24 report that the Irish banking crisis to Europe this summer, look not so reliable stress test results showed that all the banks of Ireland passed the test. In view of this, “investors would be difficult to believe that the Bank of Spain and Ireland, Portugal and the difference.”

From an economic point of view of the scale, Ireland and Portugal are relatively small economic size, but Spain is Europe’s largest economy in the world. Some analysts are concerned that the crisis could spread dramatically in the euro area external markets, the scale of the existing European aid mechanism to support relief may not be any economy of scale is greater than the country of Ireland or Portugal.

Euro remains under pressure

Ireland continued debt crisis is spreading to suppress the euro, risk aversion flooding the market. Following the two-month low below 1.3400 after the refresh, 24, was back up to 1.3419 euro rebounded slightly after the bottom, during which hovered around the 1.3400 level after a few hours suddenly worsened, and Tandi 1.3282.

German think tank research released Wednesday, the German IFO business climate index for November rose unexpectedly, to give the euro some support, but overall is still in the confined state.

Ireland can not accept the assistance and boost the euro, the dollar at the end of the year may have more growth. He believes that the market is still worried that even if the Irish have received assistance, the European debt crisis will continue to “haunt” and even escalated. The performance of the euro may be poor, but the impact on the global market is unlikely to last long, at least not as serious as before.

But Morgan Stanley believes that once the stability of European financial institutions funds were used to further support the Irish banking system, which may be regarded as the eurozone market, “bullish signal”, may also be a long-awaited European sovereign debt and banking crisis of the “circuit breaker.” But the bank also warned that the spread of the crisis remains a major concern factors, the market may finally begin to pay attention to some other countries outside the euro zone.

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