Professor Alan Ahearne:

As regards the vast bulk of the fiscal adjustment we have had to undertake, the €30 billion since 2008, very little of that has to do with the banks. People often look at the €30 billion put into Anglo and the €30 billion of fiscal adjustment and say that every single penny that was taken out in terms of fiscal adjustment, all the tax increases and all the reductions in wages, all that money has just gone into Anglo. That is simply wrong, however, and it is an inaccurate way to think about this.

In terms of the banks, the headline number is €64 billion. Anglo or IBRC is €35 billion. One really needs to think about the financing cost of those. If one can finance a bank recapitalisation at a very cheap interest rate, the actual burden of that is much lower than the headline number. For example, with Anglo and IBRC the vast bulk of that capital being put in by the State has been financed via the Irish Central Bank. It is the Central Bank which initially owned the promissory notes and now owns the bonds. They are only now selling debt into the markets.

Interest rates are extremely low at the moment. They are less than 1% which means that although the headline number looks huge, it is being financed at a really low cost. If one looked through all the payments from one arm of the State to the other, the annual cost of Anglo is probably somewhere like a couple of hundred million euro. That is not a small amount of money but it is small relative to the €30 billion adjustment, or relative to the total amount of Government expenditure.