Professor John McHale:

In mid-2011, the ten-year Irish bond yield was close to 16%. If one looks at the differential between German and Irish bond yields using a standard formula, one can work out the implied probability of default. It is based on certain assumptions in terms of how much money investors will get back in the event of a default. That particular calculation assumes they will get back 50% of their money but the numbers can vary. The general point is that the markets thought it was highly likely that Ireland would default. The implications of that would probably have been far greater austerity. Even if we did get official support, it would probably have come with much tougher conditions than the ones we faced and - depending on how that default unfolded - the possibility that we would not get support at all. We would have to have immediately closed our primary deficit which at that point in time was still very large.

Even thought it may not always seem that way, the goal here is austerity avoidance. We have been focused on ensuring that we are following a fiscal policy that retains that borrowing capacity and dealing with the trade-off I discussed before with Deputy Kevin Humphreys.

Thinking of the council as just following the rules and being completely divorced from what this means for families in the economy, does not capture what we see ourselves as doing.