Republic of Ireland's bailout terms ‘won’t be eased’
The new Irish government's hopes of easing the €85bn (£72bn) bailout burden have been dashed.
German Chancellor Angela Merkel has virtually ruled out lowering the crippling interest rate.
Ms Merkel's snub will come as a major blow to Fine Gael leader Enda Kenny as negotiators from his party and Labour are locked in talks to form a new coalition.
The prospective partners are further hampered by gloomy new figures which reveal the Republic’s finances are in a worse shape than expected.
But while the gap between the Republic’s income and outgoings narrowed slightly in the first two months of the year, it was not enough to meet official targets, new figures have confirmed.
Despite deepening economic woes, Chancellor Merkel indicated there would be no special treatment for Ireland.
Speaking at a Press briefing with Portuguese Prime Minister Jose Socrates in Berlin, she insisted it was not possible to “artificially lower” the interest rates charged to the Republic.
During the election campaign, both Fine Gael leader Enda Kenny and Labour leader Eamon Gilmore promised to renegotiate
the “penal” rate of interest on the EU's portion of the bailout deal.
But Ms Merkel's uncompromising message was that Ireland and Greece had “tapped an aid programme” and agreed to conditions they must now fulfil.
Mr Kenny had been expected to raise the issue of renegotiating the interest rate at an upcoming meeting with Ms Merkel and |other European People's Party leaders in Helsinki, Finland. But a spokesperson for Ms Merkel said she would not be having a one-to-one meeting with Mr Kenny, like she did during the election campaign.
As the Fine Gael-Labour talks on a coalition deal continued, Taoiseach Brian Cowen and the seven ministers remaining in his depleted cabinet met in government buildings, their final meeting is scheduled for next week.
A short distance away, Fine Gael and Labour negotiators continued talks on the policies and complexion of the next government.
The key issues remain the differences between Fine Gael and Labour on reducing the Budget deficit (€7bn/£5.9bn reduction target for Labour, €9bn/£7.6bn for Fine Gael) and the length of time required to do it (2016 for Labour, 2014 for Fine Gael).