Over the last number of weeks the Irish banks have held the headlines both domestically and internationally, culminating in the announcement on Thursday on the cost of the bailout. The cost for Ireland in just one year will be 20% of GDP, or €32bn. The banking bailout cost is so great the media have focused constantly on it, but while the cost is painful, it is a once-off.

Unlike the banking problem, the fiscal issue is an ongoing problem, resulting in the national debt increasing each year. In 2010, Ireland will have a difference between its tax revenue and spending of circa €19bn, in other words, the budget deficit.

A four-year budgetary plan is now being put forward by the government to show international markets how Ireland is going to eliminate the deficit over the coming years. The aim is to reach the agreed budget deficit target of 3% of GDP by 2013.

To start the process, Ireland is looking to achieve more than €3bn in savings this year, and greater savings in future years than previously thought. The minister for finance's claim in the last budget that the worst was over now rings hollow for taxpayers.

These greater cuts will be achieved by "revenue-raising measures" and "fundamental reappraisal of the public sector", according to the government. This in plain language means taxes such as an annual property tax, water charges and bringing the lower paid into the tax net.

Other areas targeted will be the public sector, with the potential for further pay or number reductions. As salaries and pensions make up such a large part of government spending, implementing greater austerity will be almost impossible to achieve without looking at further cuts in this area.

Difficult decisions will have to be made by this government – and others that will follow – to achieve deficit targets, a situation made all the more complex with a banking crisis in the background.

Countries such as Ireland are being asked to implement austerity measures as outlined above, but I would argue that, from a fiscal perspective, little support is being given to the weaker peripheral nations. The so-called "PIIGS" (Portugal, Ireland, Italy, Greece, Spain) are being asked to implement austerity measures while the ECB remains focused on the threat of inflation and is fixated on the core economies in determining policy, especially Germany.

The ECB continues to focus on, and be concerned over, inflation, and maintains it "remains vigilant" for inflationary pressures. This in a world economy where the US and UK are so concerned about growth and deflation that both economies may look to implement quantitative easing again. In the case of the US, timing and size of such a move are the only unknowns.

Growth across the world remains weak, affected by the banking sector providing little or no credit to economies. Due to weaker economic growth and uncertainty over capital requirements, banks are retaining capital to boost capital ratios instead of lending, negatively impacting on growth. Conditions are even more difficult for peripheral banks in the eurozone as concerns over peripheral sovereigns and eurozone stability make it difficult to access wholesale funding markets, leading to increased reliance on ECB borrowings.

Eurozone interbank markets therefore remain difficult, but again the ECB is looking to remove extraordinary liquidity support with the aim of trying to normalise interbank interest rates back towards 1.00%.

It is in this environment the ECB believes eurozone growth will be strong enough to handle normalisation of interest rates. Peripheral-nation problems – such as how they will manage during this normalisation – don't seem to concern the ECB.

It could be argued that the EFSF, launched with great fanfare in May, was put in place to help peripheral nations. Unfortunately, this fund has been shown to be smoke and mirrors, constructed in such a way that it will not be used. The Financial Times showed during the week how the fund only has €250bn to lend compared to the claimed €440bn, with an estimated cost to the borrower of 7-8%. Therefore, Europe has created a bailout fund that will charge interest rates almost 1.6 times higher than what it lent to Greece, and that isn't adequately funded to help larger nations such as Spain.

A bailout fund constructed so that it will not be drawn on is of little use to peripheral nations. Ireland finds itself in a situation where we must implement significant austerity measures over a multi-year period without any fund in place to help us and other weaker eurozone nations.

I have argued in the past, and will continue to argue, that Ireland must restore fiscal stability, and this will involve all sectors of society taking the pain. Reductions in numbers and/or pay in the public sector, spending cuts and increased taxation will all be required to solve our fiscal difficulties.

While it is best for Ireland and other peripheral nations to solve their own fiscal issues, asking these countries to implement these painful adjustments must be met with support from core nations if required.

The EU is a union and not a club; refusing to support weaker nations is not an option if the euro is to survive. By allowing the market to question the stability of the euro, it makes conditions even harder for peripheral members.

It must be realised by core nations that forcing peripheral ones to undertake austerity must also be met with support in a real form and not just hollow words and actions such as the EFSF. Such positive actions will make for a stronger eurozone and easier implementation of austerity measures for peripheral countries including Ireland.