REHN TO ASSESS ECONOMIC AND POLITICAL SITUATION DURING DUBLIN VISIT - Economic and Monetary Affairs Commissioner Ollie Rehn's mission today in Dublin is to reinforce the Commission's message that a severe austerity programme - the main part of the €6 billion Budget package - is needed for Ireland to emerge from its economic crisis.
Charles Forelle, the Brussels-based correspondent with The Wall Street Journal, says that Commissioner's Rehn's visit to Dublin is a clear signal that the country is in trouble and in need of help. He says the visit in this time of economic crisis is also a sign that Ireland may eventually need assistance from Europe. Mr Rehn is expected to look at what the journalist describes as the 'extraordinarily' high deficit and debt levels and will also assess what the political situation is. Mr Forelle says there is concern in the country at the moment about where the austerity cuts will hit and so Mr Rehn will find that the Budget is not being greeted with open arms.
Ahead of a warning that mortgage defaults are set to become the next massive crisis, Mr Forelle says it is well known that the Irish like to repay their mortgages and consider owning their own house a priority. But he says that if the economic situation gets any worse and if unemployment continues to increase, people will find themselves with no other option but to default on their mortgages. He says this in turn will just add another level of concern for the already troubled banking sector.
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MORNING BRIEFS - The construction sector's decline sped up last month, with civil engineering leading the fall, according to the Ulster Bank Construction Purchasing Managers' Index. job losses in the building sector continued as confidence fell again.
The index shows that the rate of contraction in the sector had accelerated for the second month running in October. Activity in the housing sector continued to fall, but the rate of contraction eased back. But of the three sectors, the sharpest fall was seen in civil engineering. Activity on commercial projects also fell substantially.
*** German Finance Minister Wolfgang Schäuble has told the Der Spiegel magazine that he is optimistic that Ireland will be able to pull out of its economic crisis. But he says that future EU bailouts would come with tough conditions, including a clause specifying the precise losses that bondholders would be expected to shoulder. He told the newspaper that the EU was not founded to enrich financial investors and he rejected suggestions that Ireland's difficulties are likely to unsettle the financial markets. He said he is not so pessimistic about the growing premiums on Irish and Greek sovereign bonds. 'The Irish have piled up huge debts because of the rescue efforts for the banks, but are coming along well with the reform of their economy,' he told the newspaper.
*** European shares hit their highest close in more than six months on Friday as better than expected US jobs data lifted sentiment that the global economy was on track for recovery. A FTSE index of top shares closed at its its highest level since mid-April. But the morning analysts say European stocks could inch lower, as investors take a breather following last week's strong rally.
*** On the currency markets the euro is trading at $1.3933 cents and 86.34 pence sterling.
