Ireland: Narrow vote sees Finance Bill through to next stage

Ireland's embattled minority government won a preliminary vote yesterday on a deficit-cutting budget designed to comply with requirements for a massive international bailout, and the governing Fianna Fáil party elected a new leader.

The Finance Bill passed its second stage on a vote of 80 to 77 in Ireland's lower house of parliament after two independent MPs agreed to back prime minister Brian Cowen's government. Finance Minister Brian Lenihan promised to slap a tax on bankers' bonuses at a later stage for the bill - a concession sought by the two MPs.

The bill is expected to pass its final stage in the lower house on Thursday before being sent to the upper house over the weekend. Mr Cowen resigned as leader of Fianna Fil on Saturday and the party chose former foreign minister Michel Martin as its new leader yesterday.

Mr Martin, 50, was among the ministers who deserted Mr Cowen's cabinet in recent days. He has held several government posts, including education and health, and led the drive for Ireland's pioneering ban on smoking in public places.

Fianna Fil won Ireland's last six elections, dating back to 1987, but the party has fallen to record low levels of support.

Ireland's government has been heading for collapse since November, when Mr Cowen was forced to take a €67.5 billion bailout loan from the European Union and the International Monetary Fund to prevent the country from going bankrupt.

Under the deal, Ireland must slash €15bn from its deficit spending over the coming four years and is imposing the harshest cuts this year. The parliament has already approved bills to slash welfare benefits and the minimum wage, raise school fees and cut the salaries of cabinet ministers. But the toughest measures - increasing income taxes across the two million-strong work force, raising effective tax levels to 41 per cent or more - are in the Finance Bill.