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How the World Reacted: Budget 2014

What’s the rest of the world saying about us?

SO NOW WE KNOW, for better or worse (or much worse), what the next year holds for us.

But how did the international press react to this afternoon’s Budget announcements by Ministers Noonan and Howlin? Let’s take a look.

Europe

Spain’s El País focused on the new levy for financial institutions, which will see Irish banks make an expected annual contribution of €150 million to the Exchequer. The newspaper also highlighted the retention of the reduced VAT rate of 9 per cent for the hospitality sector.

However, it notes that Ireland’s decision to “guarantee 100 per cent of deposits of a broken financial system dragged the country down the precipice of debt”.

Hindsight is 20/20.

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UK

The BBC gives a comprehensive run-down of today’s Budget announcement, noting changes to social welfare benefits, the proposed review of the medical card system, the ‘old reliables’ (ie price rise for alcohol and tobacco) as well as the slashing of the burial costs grant.

It notes the Irish government’s hope that Budget 2014 will be “the final budget of the bailout era” – and underlines the Finance Minister’s strong stance on Ireland’s corporation tax rate (namely, that rate is “settled policy” and “will not change”.)

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Meanwhile, The Guardian mentions today’s “austerity budget” announcements as part of its rolling coverage of events across the financial markets and world economy.

Henry McDonald, reporting from Dublin, noted “pre-Hallowe’en ghoulish reaction” to the removal of the €850 burial grant – quoting Fianna Fail’s finance spokesman Michael McGrath as saying: “Even the dead aren’t safe from this Government.”

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USA

The Wall Street Journal reports that Ireland is facing its “seventh year of painful austerity” and that the government will be “obliged to endure a tight regime of fiscal oversight for many more years to cut its towering national debt”. Still, it adds that the proposed cuts announced in this Budget are the smallest since 2008.

It also brings up Noonan’s poetic moment during this morning’s dry proceedings, when he quoted William Butler Yeats to the effect that “too long a sacrifice can make a stone of the heart.”

imageThe Washington Post also focused on the wider picture, discussing the fall of the Celtic Tiger, Ireland’s “bailout escape”, and likelihood of returning to the bond markets.

It noted the government had left “headline taxes” – such as sales tax, tourist tax and corporation tax – untouched, but that it had nonetheless raised charges for drug prescriptions, cut maternity pay, restricted access to state-covered medical care and reduced unemployment payments for people aged in their early 20s.

The report speculates that the move to offer free GP care for the under-5s and lift the freeze on public sector recruitment was a ploy for re-election in 2016 .

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International

Reuters said the Budget gave Irish voters a “modest break from six years of pain”, citing its aims to become the first eurozone country to pull out of an international bailout.

Noonan was “going against advice from his own central bank and initial misgivings from the EU and IMF by using savings from a deal on its bank debt to make the smaller cuts”, it said.

The report also noted the “waning popularity” of Enda Kenny’s administration after almost seven years of austerity, but says the small group of protesters gathered outside Leinster House “underlined the resignation with which many Irish have accepted austerity, compared with the rage that has rocked countries such as Greece and Spain”.

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Read: In numbers: Budget 2014
Budget 2014: the key things to know from today’s announcement
LIVEBLOG: Budget 2014 as it happens

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