After more than a decade of the so-called Celtic Tiger's economic growth, which placed it among the richest nations in Europe, Ireland has been hammered by a series of blows.
It has been hit by the international credit crisis, a severe property and construction industry downturn, falling consumer spending, rising unemployment, increased oil prices and export difficulties caused by currency fluctuations.
Ireland's move to introduce a €10 air travel tax will hurt the competitiveness of the country's travel and tourism sector at a time of already tough business conditions, business groups said on Tuesday.
Finance minister Brian Lenihan announced the move in his 2009 budget on Tuesday in a bid to shore up state coffers as Ireland slides into its first recession in 25 years. Lenihan said it is estimated the tax, which will take effect from the end of March, will yield €95m in state revenues next year and €150m in a full year.
Ireland, the first European Union country technically in recession, is planning to abandon European Union fiscal rules next year. Dublin is projecting the largest budget deficit in 20 years, as the economy slows amid a housing slump and international credit crunch.
Announcing the budget for 2009, Brian Lenihan, finance minister, said the general government deficit would be "just above €12bn" next year, 6.5% of gross domestic product. Under the stability and growth pact rules, countries have to keep borrowing to less than 3% of GDP through the economic cycle.
The Financial Times
The Irish government has released its toughest budget in two decades by hiking income tax by 1%.
A typical family will end up between €400 and €1,000 worse off as a result of a range of increased direct and indirect taxes.
Irish government ministers are taking a 10 per cent pay cut in a "patriotic" bid to pull the country out of its vertiginous plunge into recession.
The London Times
Ireland's economy will contract by 0.75% next year, finance minister Brian Lenihan said as he delivered his budget.
Sydney Morning Herald
Lenihan forecast that the economy will shrink by more than 1.5% this year and by another 1% next year, while unemployment will rise from its current 10-year high of 6.3% to an average of 7.3% in 2009. Those developments mean tax collections will fall and state welfare costs will rise.
Irish racing felt the force of the economic downturn yesterday when Brian Lenihan, Ireland's finance minister, announced a cut of €6.6m – or nearly 10% – in the government's Horse and Greyhound Fund. Lenihan also doubled the rate of betting duty in Ireland, from 1% to 2%, a move which could raise as much as €40m per year from the country's punters.
THE toughest budget in 20 years was announced by Minister for Finance Brian Lenihan in the Dáil (parliament) on Tuesday, reflecting the severity of the economic problems now facing Ireland.
Due mainly to the property slump, tax revenues in Ireland now fall far short of what is needed to pay for state services. The resulting deficit had reached crisis point, prompting the government to bring the budget forward to October from December.
The Irish Voice