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What euro deal means for us

THE Government was today under huge pressure to reduce the burden on taxpayers after EU leaders agreed an astonishing €100bn deal.

As families here face up to another austerity budget, half of Greece’s national debt was written off.

The huge write-off is expected to force a major rethink here with some commentators saying Ireland now has good grounds for seeking some let-off on our debt burden.

The opposition said there was “a compelling case for this issue to be revisited”.

There was nothing in this morning's deal that will automatically reduce the burden on Irish taxpayers, it has emerged.

Following the agreement at a summit of EU leaders, Greece will have its debt cut in half.

The heads of state reached a deal with private lenders for a 50pc haircut on the country's sovereign bonds.

Shares in Dublin jumped by 2.6pc this morning – the surge was in line with gains of 2pc-4pc in other markets across Europe.

It came following last-minute talks between a delegation of EU leaders and senior officials representing the banking sector at the summit in Brussels.

Repaid

However, as part of the package, the Government “signed up to the totality” of our debt, according to Fianna Fail finance spokesman Michael McGrath.

“The fact is that the Irish government has made a sovereign commitment to every other member state that all of our debts are going to be repaid.

“There isn't anything in the deal that will save Ireland money,” he told the Herald.

But he insisted that the cost to taxpayers of our mammoth bank bailout must now be reduced “retrospectively”, even if nothing can be done about the size of our sovereign debt.

“What can be done now is that the cost of recapitalising the Irish banks can certainly be revisited.,” he said.

“Irish banks have been recapitalised at huge cost to the Irish taxpayer – a cost so far of about

€64bn – so we believe that if other countries are able to avail of cheaper European finance to fund the recapitalisation of their banks, that should be applied retrospectively to Ireland.”

Taoiseach Enda Kenny said EU leaders have acted in a decisive manner and the deal allows for a much improved environment within the euro zone, in which Ireland can focus on creating real opportunities for jobs.

He said the leaders' communiqué says that Greece was in “a unique and individual situation” and “there is continuing funding for Ireland” which is specifically referenced.

In addition to the reduction of Greek's state debt, EU leaders said an outline plan has been finalised to boost the EU bailout fund to €1 trillion and recapitalise European banks.

European Commission President, Jose Manuel Barroso said the measures were exceptional for exceptional times.

On the back of the deal, the euro this morning hit $1.40 for the first time in seven weeks in Asia.

The Brussels summit eventually concluded at 3am (Irish time) following hours of talks over how much of a hit private investors were going to take.

The deadlock was broken after face-to-face meetings with French President Nicolas Sarkozy, German Chancellor Angela Merkel, Council President Herman Van Rompuy and IMF chief Christine Lagarde and officials from the banking lobby, the Institute of International Finance.

The boost to the EFSF fund is intended to provide a firewall against contagion from Greece spreading across the euro zone.

hnews@herald.ie