Ireland may face sov debt restructure
Tuesday 8 February 2011 - by Andrew Hickley
Ireland will need further help after EU funding ceases and cannot rule out having to restructure its sovereign debt, according to a report on the republic's economy.
The report recommends another potential measure to help the damaged financial system. "A lowering of the interest rate on EU loans, however, would give Ireland a higher probability of weaning itself off aid by 2014."
The report adds that the country's low 12.5 per cent corporation tax rate is unlikely to be altered despite the bailout, declaring it as forming the "backbone of Irish foreign direct investment and export policy".
While it states that the European Commission is progressing work towards a proposed unified European common consolidated corporation tax base, unanimity is required for taxation issues and the country has a right to use a veto, having previously rejected a change in the tax when negotiating the loan.
It also noted that Ireland will have to endure a jobless recovery at least until 2011, with employment expected to contract marginally.
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