The debt crisis gripping the eurozone claimed its second victim in six months on Sunday night when European finance ministers agreed to a request from Ireland for a multibillion-euro emergency rescue.
But the deal may not be concluded until the end of November because the parties are still negotiating the conditions attached to the aid.
But it put paid to Europe’s hopes that a “shock-and-awe” €750bn backstop, arranged after a bail-out of Greece in May, would impress financial markets so much that it would never need to be used.
Ireland will have to cut fast and deep.”
The package would include a fiscal package on the national budget that would see increased taxes and reduced spending.
Mr Cowen insisted that the country’s corporation tax, a bone of contention with other Eurozone members, had not arisen as part of the negotiations.
Acute tensions in bond markets are also affecting Portugal, whose government fears succumbing to the backwash of the Greek and Irish turmoil.
European officials have emphasised inherent differences in the Greek and Irish crises, with the problems in Athens centred on fiscal irresponsibility, unreliable statistics and public sector corruption rather than the recklessness of the banking sector as in Ireland.
Yet as Ireland wobbled last week, EU officials were mindful of the slow and fractious response to Greece’s slide before a bail-out was finally cobbled together in early May. Analysts and diplomats broadly agree that the delay further unsettled markets and drove up the cost of the eventual rescue.
Speaking on Irish radio, he declined to disclose the interest rate the country would have to pay on any EU-IMF loans, but said it would be “a lot less than what we have to borrow at if we went to the world markets”.
The Irish government’s beleaguered position was underlined by a poll in the Sunday Business Post by Red C that put Fianna Fáil on 17 per cent of first preference votes, less than half the level it achieved at the last general election in 2007.