Bank Bail-Out Adds to Irish Deficit

After being forced to bail-out Anglo Irish Bank in a move expected to cost anywhere from 29.3 billion to 34 billion euros ($46.4bn; £29.2bn), authorities say the Irish Republic’s fiscal deficit will rise to 32% of total gross domestic product (GDP). Without the additional bank support, the deficit would be around 12%.

The BBC’s business editor, Robert Peston, said the equivalent of about a third of the Irish economy had gone into supporting the banks:

“If you added together all the capital provided to Ireland’s banks by various arms of the state, taxpayer support to those banks in the form of capital injections is around 30% of GDP.”

He said that would compare with around 6% of GDP in the UK for the equity injected into Royal Bank of Scotland, Lloyds and Northern Rock.

Source: BBC News

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