Black Thursday could mean bad news for all
Published 01/10/2010 | 08:00
The nationalisation of a fourth national bank and its fourth 'austerity' budget in two years due in December...no wonder yesterday was dubbed Black Thursday by opposition leaders in the Republic.
In a long statement from Finance Minister Brian Lenihan, First Trust parent Allied Irish was nationalised while Anglo Irish turned out to require another â‚¬7bn shot in the arm.
Those announcements will have a huge impact on confidence in Northern Ireland, subverting the old received wisdom that our economic psyche has been more influenced by what happened in the UK than in the Republic.
Many of our companies depend on trading with customers in the Republic, who will now be feeling extremely nervous about the future. It will be hard to ignore the difficulties 'down south' even as we grapple with the implications of the spending review later this month.
The tentacles of Anglo Irish and its unhealthy state have already stretched into the north's property market.
Peter Curistan, the developer who established the Odyssey Complex, embarked on legal action against Anglo after it put his Odyssey Pavilion into administration earlier this year.
Jermon Developments, meanwhile, has seen several jewels in its portfolio come onto the market thanks to Anglo calling in debts, with land for development including landmark high rise Fanum House in the city centre and separately, Killymeal House in the Gasworks, now up for sale.
The Republic's Finance Minister Brian Lenihan said the new costs were "horrendous" and that a programme of cuts in December's budgets would have to be "upped".
But he said the worst had come, with the new figures bringing an end to the "nightmare" of the last 18 months. "We're quite satisfied that the balance sheets of the banks have been cleaned up and restored and the banks are ready and fit to go back into business."
And he justified the extent of the bailouts to taxpayers.
"Any Anglo failure would bring down the sovereign. It is systemically important, not because of any intrinsic merit in the bank. But because of its size relative to the national balance sheet. No country could contemplate the failure of such an institution."
Mr Lenihan insisted the huge injection of cash was a one-off but one analyst said he feared there could be an ever higher bail-out bill next year.