The financial markets continued to pile pressure on Ireland today after its four-year austerity plan failed to calm investors' nerves.
The cost of insuring Irish sovereign debt against default rose, while traders continued to demand a hefty premium to hold Irish bonds.
Traders said the political turmoil in Dublin was still alarming the City. Fine Gael, the largest opposition party, added to the uncertainty by warning that it would not be bound by the €15bn (£12.7bn) austerity programme announced by the taoiseach, Brian Cowen.
Enda Kenny, leader of Fine Gael, today pledged that part of the plan would be renegotiated if his party got into government. This could include reversing the 12% cut in the minimum wage, and tougher measures on the banking sector. Fine Gael is expected to win power in the next January's general election.
The rescue plan contains €10bn of spending cuts and €5bn of tax rises. It will help Ireland obtain €85bn from the IMF and EU to stabilise its finances and recapitalise its banks. Further details of the tax changes will be announced in next month's budget.
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