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Friday, November 19, 2010

The Bailout That Dare Not Speak Its Name

Ireland has finally bitten the bullet wrt the asking for a bailout from the IMF/EU. Negotiations over the terms of that bailout started today.

Key to those negotiations will be the 12.5% rate of corporation tax that has been the heart heart of Ireland's growing economy.

Whilst it will come under immense pressure from the EU to raise that rate (as the EU believes that it distorts the market), Ireland should bear in mind that the EU is desperate to shore up the Euro. The longer the uncertainty over the Irish economy continues, the greater the damage done the Euro.

All Ireland has to do is refuse to accept any bailout that ties a rise in corporation tax into the terms and conditons of the bailout. The EU is on the back foot here, like it or not it cannot afford to allow the Irish economy to go under.

The Irish people should not fret so much as their media is doing, Ireland is in a far better negotiating position than Greece was.

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