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Europe crisis deepens as Ireland shores up ba -

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Europe crisis deepens as Ireland shores up banks

Broadcast: 01/10/2010

Reporter: Emma Alberici

Europe's debt crisis appears to be deepening with Ireland putting up more than $50 billion to shore
up its banking system.

Transcript

TICKY FULLERTON, PRESENTER: Europe's debt crisis appears to be deepening, with Ireland putting up
more than $50 billion to shore up its banking system.

The country's deficit will now be the largest in Europe since the Second World War.

And the Irish government is set to impose more spending cuts, a move that has caused riots in other
European countries.

Europe correspondent Emma Alberici reports.

EMMA ALBERICI, REPORTER: The skeletal remains of Ireland's doomed housing projects tell the story
of an economy that became too reliant on the country's property developers. Just 100 of them are
said to have brought the Anglo Irish Bank to its knees.

The Government has told its taxpayers that they will need to spend $50 billion bailing out the
bank, more will be spent saving the Allied Irish Bank.

BRIAN LENIHAN, IRISH FINANCE MINISTER: The Irish people are entitled to be angry with the bankers
who lent recklessly over a considerable period of time in the earlier part of this decade.

EMMA ALBERICI: The Government has warned that if it doesn't help the banks, their collapse could
bring the whole country down with them.

BEN MAY, CAPITAL ECONOMICS: The Government has a large underlying budget deficit as well which it
will need to reduce over the coming years, and there's clearly issues about whether it will be able
to do this without sending the economy into a deep recession.

EMMA ALBERICI: The Irish economy is the first in Europe to risk going into a double dip recession
after contracting in the second quarter.

As a member of the Eurozone, Ireland's pain is split 16 ways with the other countries that share
the common currency.

The EU is now insisting that countries stop spending so much more than they can raise in taxes.

JEAN CLAUDE TRICHET, EUROPEAN CENTRAL BANK PRESIDENT: What is absolutely key for us is the
credibility and the delivery of this unequivocal commitment to correct the excessive deficit by
2014.

EMMA ALBERICI: Spain's first nationwide strike in close to a decade revealed the public's anger
about government spending cuts in the Eurozone's fourth biggest economy.

Moody's has become the latest to slash Spain's credit rating which will only make paying off its
existing debts all that much harder.

Emma Alberici, Lateline.