THE FINE GAEL finance spokesman Michael Noonan has said that he believes media speculation about European intervention into the State’s finances is true. He told BBC News today that he believed “things will come to head in the next 24 hours”.

Shortly before Portugal announced today that there is a high risk that they will accept a bailout from the EU, Mr Noonan, the main Opposition finance spokesman, said that he was “extremely concerned” that Ireland would literally run out of money.

The reports over the weekend are true. I think there is a European intervention underway (into the debt crisis here). I think the Irish goverment is fighting a rearguard action for appearances purposes. But there is a meeting of the eurozone ministers for finance in Brussels tomorrow afternoon and on the following day there is a meeting of  Ecofin – that is the finance ministers of the whole European Union – and I believe things will come to a head in the next 24 hours.

Mr Noonan said that the banking crisis was a huge part of the pressure being exerted on the Irish reputation in the bond market. He said:

The bond market isn’t distinguishing between sovereign debt and bank debt and I think the speculation that’s current is starting with the banking situation rather than the sovereign situation.

He also said that he believed a bailout for Ireland would lead to us being suspended from the bond markets for three to four years. However, Mr Noonan said he felt the crisis would be manageable if the Government sticks to a “rigorous Budget” on December 7. Justice Minister Dermot Ahern said today that he expects the four-year budget plan to be published next week.

A markets insider told TheJournal.ie today that the Department of Finance had been burning the midnight oil all weekend trying to find a proposal that might allow Ireland to retain sovereignty over their finances while accepting some measure of bailout. The source said:

The two Brians are fighting for their reputation and there were intense negotiations into the night in some offices over the weekend. They are trying to pull together proposals, one of which might have been the one in the Independent this morning (that the Government would seek EU funds for the banks alone, so allowing the Government to continue running the State coffers itself). The Spanish are having a big problem with that so it could be a case of all or nothing with a bailout. I can’t think that they have any bullets left. I could see something happening by Thursday morning.

This afternoon, the ECB Vice-President Vitor Constancio said that the Irish government might be allowed to use the EU emergency fund to recapitalise the ailing banks – but that the ECB couldn’t give the money directly to the banks.