Euro turning into the Psycho currency as horror mounts

ENJOY a good horror story? Forget Mary Shelley or Stephen King, the Irish austerity plan is likely to send more chills down your spine.

After three days of hand-wringing and no-doubt several heated exchanges, the Irish Cabinet finally unveiled a €15 billion (12.7bn) austerity plan yesterday to meet the terms of a European Union/International Monetary Fund bail-out.

Brace yourself because it's not for the faint of heart. Almost 25,000 jobs are to be axed from the public sector over the next four years, VAT will be hiked by 2 per cent to a hefty 23 per cent and the minimum wage will be slashed by a euro to €7.65 (6.48). As a result, Irish citizens have been warned to expect a substantial reduction in their standards of living.

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One particularly philosophical friend from Dublin recently suggested to me that our Celtic neighbours should have seen this coming because - in her words - Ireland was "given the sweet shop and we ate all of the sweets". But we all know that Dublin's woes are far from unique and there are plenty of others around Europe who may have rotten teeth.

Trouble is already brewing in the sophisticated streets of Madrid. One startling statistic to emerge this week is that the Spanish government is now paying more interest for three months of borrowing than Germany is charged to service five-year debt. Portugal is also having a tough time persuading the bond traders that it isn't next on the bail-out list.

Of course, scare-mongering is common on the financial markets but, unlike the Greek crisis earlier this year, there's a sense that this time, the eurozone dominoes really could fall.

European leaders are trying to keep a lid on the panic but they'll be well aware that some of the toughest decisions of their careers lay ahead.

Several options have been mooted by analysts, including a devaluation of the European currency and a two-tier euro. Neither would be simple, given that the wealthier countries such as Germany would heavily oppose a devaluation and it would be a legal nightmare to sort the eurozone members into what effectively will be first and second class countries.

Whichever path leaders choose, there are going to be losers. And the angry scenes we saw yesterday as Britain's students took to the streets may be nothing compared to what the next few months have in store. Fasten your seatbelts, it's going to be a bumpy ride.

Time and tidal power wait for no man, or for government support

WHILE it may be some time before the rest of Ireland pops the champagne corks again, in Edinburgh one Irishman, at least, is celebrating.

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Martin McAdam, the Irish chief executive of Scottish renewables firm Aquamarine Power, has secured a further 11 million of investment, which will take the company's Oyster tidal device - currently being tested at the European Marine Energy Centre off Orkney - one step closer to commercialisation.

Around 3m of that sum has been raised from existing shareholders, including Scottish & Southern Energy's venture capital business. This latest funding round raises SSE Venture Capital's holding in Aquamarine Power to 45 per cent, bringing its total investment in the company over the last three years to 9.8m.

Perhaps more encouragingly, however, Aquamarine Power has also attracted 8m from ABB Technology Ventures, a Swiss-Swedish multinational headquartered in Zurich.

Securing funding from more international investors has long been viewed as the key to moving Scotland's burgeoning marine energy sector to the next stage, and First Minister Alex Salmond was grinning from ear to ear as he opened Aquamarine's new premises on Edinburgh's Elder Street yesterday.

But McAdam isn't buying the Aston Martin yet. As he told this newspaper, Britain has let its lead in lucrative industries slip through its fingers before - as it did in the eighties with onshore wind power.

Although UK firms had better technology at the outset, the Danish government acted more swiftly to introduce a support mechanism to incentivise small, early development.

The result was that Denmark developed a wind turbine manufacturing industry which was valued at €6bn in 2008 while Britain has to buy almost all of its large turbines from abroad.

McAdam is adamant that politicians do not let the same happen to marine energy. Scotland has stolen a march on the rest of the world by developing a string of wave and tidal devices but other European countries aren't that far behind.

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Now is not the time for complacency, says McAdam and he is calling for the same support given to the North Sea oil industry in the sixties and seventies to be extended to the offshore renewables sector.

Sure, that support won't come cheap, he admits, but it paid off for oil and gas and it can pay off for renewables.

McAdam believes it all comes down to a question of political will. Let's not fall at the final few hurdles.