ONE OF IRELAND’S leading economists has warned that Ireland will not be able to return to the money markets next year as it had planned – and that it will face the prospect of having to ask for a second bailout from the EU and IMF.
UCD professor Karl Whelan gave a presentation to the IIEA this week in which he argued that Ireland’s potential for economic growth had been dramatically reduced since the original bailout was accepted six months ago.
As a result, the economy would not reinflate to a level at which the markets would be willing to lend to Ireland at a sustainable rate – with the end result that Ireland could empty the €50bn of reserves set aside for the banking sector.
Having done so – and with the government without any hope of sealing its budget deficit before that time – the country would then be forced to consider asking the EU and IMF for a second batch of emergency funding.
Whelan acknowledges that Greece is currently a larger worry, however – noting that if Greece was to restructure its debts, and see the ECB having to take a loss on its lending, it might be forced to act similarly for Ireland and see itself plunged into bankruptcy.
A video of Whelan’s presentation can be viewed here:
(h/t Business Insider)
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