28 Nov 2010

Giant protest march through streets of Dublin

10:29 am on 28 November 2010

Tens of thousands of people marched through Dublin on Saturday in protest at the Irish government's austerity programme.

Organisers say more than 100,000 people took part, while police estimate that "in the region of 50,000" people marched to Dublin's General Post Office, site of the nationalist uprising against British rule in 1916.

The protesters say it's the first of many demonstrations over plans to raise taxes and cut public spending in an attempt to reduce the the Irish Republic's massive government deficit, exacerbated by the rescue of the country's banks.

A spokesperson for the Irish Congress of Trade Unions president, Macdara Doyle, told the BBC the protest is designed to send out a clear message:

"We're trying to convince government and show government that there's no support for their plan amongst civic society and that every measure they have taken to date has been exactly the opposite of what they need to do."

Terms of bailout deal near

The march came as officials met to hammer out the final details of a financial bailout for Ireland.

The EU and the IMF are set to lend the country more than $150 billion, with the terms of the deal expected to be announced on Sunday ahead of the markets reopening on Monday.

State broadcaster RTE has reported that the interest rate to be paid on part of the loan could be as much as 6.7%, higher than the rate charged to Greece for its bailout, which has raised concerns from opposition parties.

However, Communications Minister Eamon Ryan rejected the report, telling RTE radio: "I think that figure was inaccurate, and it was unfortunate because it did scare a hell of a lot of people."

The austerity package, announced on Wednesday by Prime Minister Brian Cowen, includes proposals to cut the minimum wage, slash the number of public sector jobs and increase taxes in order to save about $26 billion over the next four years.

What went wrong?

The BBC reports that the 1990s were good for the Irish Republic's economy, with low unemployment, high economic growth and strong exports creating the "Celtic Tiger" economy. Many multi-national companies set up in Ireland to take advantage of low tax rates.

At the beginning of 1999, Ireland adopted the euro as its currency. From then on, its interest rates were set by the European Central Bank and suddenly borrowing money became much cheaper.

Cheap and easy lending and rising immigration fuelled a construction and house price boom. The government began to rely more on property-related taxes while the banks borrowed from abroad to fund the housing boom.

All this left Ireland ill-equipped to deal with the credit crunch. The construction sector was hit hard, house prices collapsed, the banks had a desperate funding crisis and the government was receiving much too little tax revenue.