THE government is facing into its most crucial fortnight since it introduced the bank guarantee two years ago with final decisions required on what to do with the toxic Anglo Irish Bank and the renewal of the guarantee before the end of the month.

Finance minster Brian Lenihan will meet with EU competition commissioner Joaquin Almunia in Brussels tomorrow to push for early commission approval of a restructuring plan for Anglo.

Government TDs are in shock at the magnitude of the problems at Anglo. There is a recognition at cabinet that the bank is causing enormous damage to the state's reputation and that some certainty needs to be brought to the situation to reassure the spooked financial markets.

Following their statement on Anglo after last week's cabinet meeting, ministers have decided not to make any further comment on the bank until the restructuring plan is approved and published.

Speaking on Newstalk's Saturday Edition programme yesterday, Labour's Pat Rabbitte said the situation was "so potentially serious that our economic sovereignty could be at risk".

One government TD told the Sunday Tribune that the next two weeks were "absolutely critical". He said: "What the government is doing on the budgetary side has generated confidence internationally but to really get at the gap between revenue and spending, you need to generate economic growth. But at the moment people can't get credit and without credit, you can't have growth. There's also the increasing cost of borrowing money for the government [because of the uncertainty over Anglo]".

The expectation among TDs is that an orderly wind-down of Anglo-Irish – rather than the bank management's good bank-bad bank proposal – will be the chosen option.

TDs are hopeful that once the plan is published it will reassure the financial markets by bringing more certainty about what will happen to Anglo and the final cost.