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Brian Cowen speaks at a press conference announcing Ireland's EU-IMF bailout last November. Peter Morrison/AP
Bailout 2?

UCD's Karl Whelan: Ireland faces needing a SECOND bailout

The current market conditions won’t allow Ireland to borrow through normal means by next year – leaving us in the lurch.

ONE OF IRELAND’S leading economists has warned that Ireland will not be able to return to the money markets next year as it had planned – and that it will face the prospect of having to ask for a second bailout from the EU and IMF.

UCD professor Karl Whelan gave a presentation to the IIEA this week in which he argued that Ireland’s potential for economic growth had been dramatically reduced since the original bailout was accepted six months ago.

As a result, the economy would not reinflate to a level at which the markets would be willing to lend to Ireland at a sustainable rate – with the end result that Ireland could empty the €50bn of reserves set aside for the banking sector.

Having done so – and with the government without any hope of sealing its budget deficit before that time – the country would then be forced to consider asking the EU and IMF for a second batch of emergency funding.

Whelan acknowledges that Greece is currently a larger worry, however – noting that if Greece was to restructure its debts, and see the ECB having to take a loss on its lending, it might be forced to act similarly for Ireland and see itself plunged into bankruptcy.

A video of Whelan’s presentation can be viewed here:

(h/t Business Insider)

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