Irish budget deficit soars after new bank bail-out

The cost of bailing out the Republic of Ireland's stricken banks has risen to €45bn (£39bn), forcing the country's roughly two million taxpayers to pick up the bill.

The increased cost will see the government run a budget deficit equivalent to 32 per cent of GDP this year - more than 10 times the EU's official limit. The cost includes a bill of up to €34bn to rescue the worst-hit lender, Anglo Irish Bank.

The government said it would now have to rewrite its budget to cut borrowing more quickly in the coming years. Previously it was committed to bring its budget deficit down from 14.3 per cent of GDP last year to 3 per cent by 2014.

Brian Lenihan, the Irish finance minister, defended the cost of the bail-out measures, which will cost the Republic's taxpayers the equivalent of €22,500 each.

"The bank had grown to half the size of our annual national wealth, so clearly the failure of a bank on that scale would do huge damage to the local economy here in Ireland," he said.

Read a full report at BBC News. ·