Tuesday, March 19 11:11:27
A botched job on the Cyprus bailout could severely damage other Eurozone economies, particularly Ireland, the Irish Exporters Association (IEA) warned today.
The unprecedented proposal to levy bank deposits in Cyprus as part of a bailout package threatens to reignite the Eurozone's debt crisis and push EU markets further into recession, according to the IEA.
"The Cyprus news is the most negative news we've had in some time, and comes at a very bad time for Irish exporters, who are already reeling from the impact of the horse meat scandal," said John Whelan, chief executive of the IEA.
Euro-area finance ministers are seeking to impose a 10pc tax on all bank deposits in Cyprus as part of a plan for a 10 billion-euro bailout of the nation. Other elements of the rescue include asset sales and an increase in the corporate tax rate to 12.5 percent from 10 percent.
The IEA called on Minster Noonan to urge his fellow EU finance Ministers to be more flexible on the application of the bailout package, and not put Cyprus in the same straight jacket Ireland was forced into.
The IEA ceo stated their overriding concern was that a badly handled Cyprus bailout package could see a run on bank deposits and spread crises to other countries that may need further bailout such as Italy, Portugal and Spain, and in the process destabilise the euro and threaten the Eurozone itself.
"The Eurozone is in a very fragile condition just now, and according to the IMF will contract by half a percent this year .The Cyprus crises if badly handled by the EU leaders, could push the recession deeper and will make life very difficult for Irish exporters who rely on the EU markets for 59pc of Irelands manufactured goods, including agri foods, and 35pc of all services exports," said Mr Whelan.