Austerity measures are proving deeply unpopular ‘No chance’ of eurozone collapse
Austerity measures are proving deeply unpopular The euro has continued its slide against the dollar as investors digest the Irish Republic’s austerity plan.
The currency fell by almost half a cent to $1.3325, and has now fallen by more than three cents this week.
The four-year Irish plan is designed to save 15bn euros ($20bn; £13bn) through spending cuts and tax rises, but investors remain unconvinced.
The government is also negotiating a bail-out package with the European Union and International Monetary Fund.
This is expected to be worth about 85bn euros.
The austerity measures are designed to reduce the Republic’s budget deficit, which is the highest in the eurozone.
However, there are doubts about the Irish government’s growth estimates, which directly impact its deficit forecasts – many investors see them as overly-optimistic.
EURO V US DOLLAR Last Updated at 25 Nov 2010, 02:40 ET *Chart shows local time 
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The government still expects the economy to average 2-2.5% growth in 2011, and 3.5-4.5% the year after, whereas rating agency Standard & Poor’s has said it expects virtually no growth over the next two years.
There also are also doubts about the whether the government will be able to push through its austerity measures when parliament votes on the budget on 7 December.
Compounding this uncertainty are fears that the Irish debt crisis will spread to other countries with high deficits, in particular Portugal and Spain.
All these factors are putting pressure on the euro.
In total, the spending cuts announced in the recovery plan will amount to 10bn euros, while tax rises will bring in a further 5bn euros.
The cuts include 2.8bn euros of savings in social welfare spending, 24,750 public sector jobs cuts and a 1 euro reduction in the minimum wage, to 7.65 euros an hour.
The tax rises include an extra 1.9bn euros from income tax changes, an increase in VAT from 21% to 22% in 2013, and to 24% in 2014, and a new “site value” property tax to raise 200 euros from most homeowners by 2014.
The government has already implemented 15bn euros of cuts in the last two years.
The measures have proved deeply unpopular with the electorate, and junior government partner, the Green Party, has called for a general election in January.
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