Former tiger Ireland's woes increase as growth forecast cut

Ireland's economy will crawl to a virtual halt this year, defying government hopes of modest growth, the central bank said yesterday, underlining the challenge the country's leaders face to revive its fortunes.

Brian Cowen, the most unpopular Irish prime minister in modern history, will unveil a four-year plan next month for tackling the worst budget deficit in the EU and prospects of a recovering domestic economy helping to narrow the gap appear remote.

The central bank cut its growth forecast for gross domestic product this year to just 0.2 per cent from 0.8 per cent previously and said that, given international fears about Ireland's finances, the government could not shy away from steeper cuts.