But, in an unusual move he signalled that, far from being the first of many expected hikes, next month's may be the only one for the foreseeable future.

Homeowners feared the bank would begin a series of rises that would put their ability to repay under severe strain. And prospective buyers were uncertain if much higher interest rates would topple house prices.

Mr Trichet appeared at pains to emphasise that the proposed December increase would be used to help curb inflation and not choke European economic growth.

While it is still early days to speculate, the prospect of a minimal interest rate rise means house prices are unlikely to be significantly affected in the medium term.

The Economist magazine insisted that house prices here are 'seriously' over inflated and warned they could fall by 20pc over the next five years.

More immediately, borrowers will feel a slight tightening of cash flow as they have to come up with an extra €27 per month for every €100,000 borrowed.

The basic bank rate is expected to rise by a quarter per cent to 2.25pc which will cost Irish mortgage-holders an extra €27 per month for each €100,000 borrowed.

Mr Trichet said: "After two-and-a-half years of maintaining interest rates at a level historically exceptionally low, I would consider that the Governing Council is ready to take a decision to move interest rates." He said by "moderately" raising rates, it would help curb inflation.

It will mean that the Eurozone will start to play catch-up with the US where interest rates have been raised 12 times since June 2004. At 4pc the US rates are now almost double those in Europe.

Repeating comments he used last week that fuelled speculation the European Central Bank will raise rates from a 60-year low on December 1, Trichet said a pre-emptive strike against inflation was necessary to keep economic growth on track.

Mr Martin was responding to claims that a rise in corporation tax could drive businesses out of the country and he was also commenting on recent pressure from Europe for tax harmonisation.

"To be quite clear about this, the Irish corporate tax rate has been a key cornerstone of our economic policy - getting that tax rate down to 12.5pc and keeping it there - and we don't see the same kind of pressure from Europe as we might have experienced some years back," he said.

Accession states would have a similar view to Ireland's when it comes to low corporation tax and providing incentives for investment, according to Mr Martin.

He was speaking as he heads up an Enterprise Ireland mission to Australia, where he said the Irish business presence is increasing. "There's about 50 companies with a presence now, that's up from 19 in 2001," he said.

AIB and Aviva, which owns Hibernian, have been working on a merger of the two businesses for several months, and could confirm that the deal is likely to go ahead as early as today.

The combined Ark and Hibernian Life and Pensions business will be hived off to a new holding company in which AIB will hold 25 per cent and Aviva will take the remaining 75 per cent, sources said yesterday.

However, they will both keep their separate identities. AIB's branches will continue to sell Ark Life-branded products, while Hibernian will continue to sell its products through its network of brokers.

The new partnership between AIB, the Republic's biggest bank, and Aviva, a major European player in insurance, will be the the third biggest operator in the Irish life insurance market.

The two larger players will be Irish Life, the market leader, and Bank of Ireland Life, which is a subsidiary of AIB's biggest rival, Bank of Ireland.

Speculation about Ark Life's future and a possible AIB-Aviva deal has been growing since early this year. Both parties are understood to have been in talks since the early summer.

Aviva already has insurance alliances with a number of banks throughout Europe, and it is not breaking new ground by entering a similar arrangement in the Republic.

However, some reports have said that the move could force AIB to look at the possibility of leaving the asset management business, although this speculation was dampened last week.

Its division in this sector, AIB Investment Managers (AIBIM) relies on Ark Life for about one third of the €9.9 billion it currently has under management.

Aviva is based in the UK and is listed on the London Stock Exchange. Last year it wrote close to £30 billion (€44 billion) in insurance premiums and made a profit of close to £1.5 billion.

Along with Hibernian, its brands include Norwich Union and the Royal Automobile Club (RAC) in the UK. Norwich Union is one of the biggest sellers of household insurance in Britain.

The presentation was also addressed by Pam Woodall of the Economist magazine, who said that Irish property prices were overvalued by as much as 20 per cent.

Mr Duffy said that those previously excluded from buying a house would be able to do so in the future and that this would help prices remain high.

He said the market would also be supported by falling rates of headship - the average number of persons per household - as well as by SSIA money entering the economy from next year.

"House prices are seriously overvalued not just in Ireland, but also in Australia, New Zealand, the US and the UK. A 20 per cent fall in prices is likely over the next five years," she said.

Ms Woodall said that ratios of house prices to average incomes had reached historically high levels. She said housing market trends in Australia and the UK proved that house prices could fall, even without sharp rises in interest rates, and that even modest falls in house prices could impact on the economy.

The latest document was described yesterday as “a first compromise text” by the European Commission, which said it will be the basis for discussions that will continue over the coming days.

Fisheries is the first major item on the agenda for the Farm Council when it convenes this morning and formal negotiations on the radical sugar reforms may not be reached until tomorrow.

However, a series of bilateral and trilateral meetings are likely to take place beforehand in a bid to break the negotiations logjam and broker a deal ahead of a world trade talks ministerial conference in Hong Kong next month.

Ireland is one of 11 member states opposed to the Commission's package, which proposes a 39% price cut in the institutional price for sugar, a corresponding reduction in the minimum price for sugar beet and 60% compensation to farmers for the price cut. Farmers in Ireland have warned it will be uneconomic to grow beet at €25 per tonne and they will be forced out of an industry that has been a cornerstone of tillage production here for 80 years.

Minister Mary Coughlan, who will lead the Irish negotiating team, said it is a very serious issue and the negotiations are very complex and complicated.

Ms Coughlan said she is working with a group of 10 other member states in what is known as a blocking minority, indicative of the fact they are not happy with what is on the table.

A delegation from the Irish Farmers' Association, headed by John Dillon, president, will be in Brussels to monitor the progress of the negotiations.

Ms Fischer Boel said: “There is no alternative to far-reaching reform. If we change now, we do so on our own terms, with money in the pot to ease the pain.

Ms Fischer Boel warned any delay will undermine the funding for restructuring and social compensation. The proposals made will put EU sugar production on a sustainable long-term footing.

Meanwhile, 18 African, Caribbean and Pacific countries which supply sugar to the EU warned they stand to lose up to €300 million a year under proposals to cut sugar prices by 39% over four years. Known as the ACP group, they recently called for a 19% compromise price cut.

The plan, which was hatched by the Library of Congress, would create digital copies of the large stores of historical manuscripts, personal diaries, voice recordings and other cultural items held by national libraries around the world. Even its backers, though, concede that US leadership of something that gets so close to the cultural roots of other nations is bound to provoke opposition.

Google has donated $3m for the initial work of devising technical standards and carrying out pilot studies for the project, known as the World Digital Library. Items to be included will be chosen and presented based on recommendations from specialists in each of the countries concerned, said Mr Billington. He added that commentaries on the items, in both the original languages and in English, would be included, though the text would be intended only to explain the context of each item.

While saying that US values would not play a part in the ambitious global plan, Mr Billington pointed to his library's origins in Thomas Jefferson's personal book collection to explain the motivation behind the idea. The American Founding Father had believed that greater public access to knowledge and information was essential “if democracy is ever going to work on a continental scale,” he said.

Google and its rivals including Microsoft are already competing to digitise the world's leading libraries such as those at Harvard and Oxford universities.

The groups' criticism is directed at the European Telecommunications Standards Institute, the body responsible for standardisation of information and communication technology in Europe. ETSI's biggest success to date has been the creation of the GSM mobile phone standard, but more recently the body has been attacked for its allegedly lax rules on intellectual property rights [IPRs].

The telecoms groups have now tabled a proposal for today's general assembly of ETSI members warning that the body's current IPR rules leave companies exposed to "unsustainable" and "excessive" demands for royalties. They even warn that the "benefits of standardisation are being eroded".

The European Commission has already demanded that ETSI tighten its rules to ensure that none of its members can pull off a so-called "patent ambush".

The practice usually involves companies trying to turn their patented technology into an industry standard without telling other companies about their patent claim. If their technology is accepted as a new standard, companies can then demand royalties from other groups forced to use the patented technology.

Last month, Nokia and other leading handset makers formally complained to Brussels about Qualcomm, the US mobile chipmaker. They alleged that Qualcomm had unfairly used its patents on third-generation technologies to squeeze excessive royalties and licensing deals out of the industry.

Vodafone and its allies want ETSI to improve its policies so as to avoid similar disputes in the future. They suggest that IPR terms should be agreed before a standard is even set, and argue in favour of putting a cap on the "maximum royalty payment from individual IPR users to the combined IPR holders".

Their proposal, seen by the Financial Times, states: "Cumulative patent royalties/'patent stacking' can raise the licence burden to an extent unbearable to our industry."

It adds: "IPR licence fees have become a commercial issue that is limiting the industry's ability to continue to drive down costs. The issue has the potential to limit competition through direct and indirect impact on pricing."

Vodafone and the other groups point out that the problems outlined in their proposal not only affect third-generation, but technologies such as MP3 and copy protection.

The proposal's other sponsors are Alcatel, Hutchison Europe, Orange, Portugal Telecom, Research in Motion, SFR, Swisscom, TDC, Telecom Italia, Telenor and TeliaSonera.

About two-thirds of the 300 hourly employees at the Lansing Craft Center, where Mr. Fairbanks is the president of a local chapter of the United Automobile Workers, are temporarily laid off. In fact, they have not worked for most of the year. The Lansing Craft Center is still scheduled to ratchet up production early next month but will close for good sometime next year.

"There are going to be some casualties, and we are one of them," Mr. Fairbanks said. In many ways, the plant is symbolic of the problems facing General Motors. The automaker slowed production there to a trickle as demand for the vehicle it produces, the $40,000 high-performance Chevrolet SSR pickup truck, failed to keep pace with capacity. Although most employees do not come to work, under their union contract G.M. is still required to pay them.

A cold drizzle fell in a mainly empty parking lot at the center as this city took in the news that G.M. would close all or part of 12 operations in North America. Here in Lansing, where two of those plants are situated, the automaker's cuts will be deep.

Still, G.M. employs thousands of people in the area at four plants and is currently building a new factory, with modern equipment. The plants that will remain open will provide some cushion for workers who do not take buyouts.

On Monday, G.M. workers across the country met the news of the plant closings and the job cuts with a mixture of shock, resignation and frustration at the company's management.

"There's a lot of people who rely on G.M., especially in this town," said Michael McCoy, 52, a production worker at the Lansing Metal Center with 30 years at the company. The metal center, a sprawling industrial complex across the street from the craft center that makes sheet metal parts for various vehicles, is also scheduled to close.

About the time the G.M. corporate headquarters in Detroit informed union officials at the craft center of the closing next year, Mr. McCoy and his co-workers on the morning shift at the metal center were summoned to the shop floor by their union chairman and told the news.

Art Baker, the chairman of the local auto workers union that represents the 950 hourly workers at the metal center, said he learned of G.M.'s decision just 15 minutes before he told employees. "It was not the expectation that General Motors was going to get lean and mean," Mr. Baker said. "It was a real shock."

The union called the job cuts and plant closings "extremely disappointing, unfair and unfortunate." The union's president, Ron Gettelfinger, and its vice president, Richard Shoemaker, said in a statement that for workers, "hope is diminished, the future is unclear and communities are less stable."

In Oklahoma, Georgia and other states where G.M. is closing its only plants, G.M. workers will have fewer options than their counterparts in Lansing for jobs that offer such high pay and generous benefits.

"I was awakened out of my sleep and told the plant was closing," said Tammy Andrews, 35, a line worker at the General Motors assembly plant in Doraville, Ga., just outside Atlanta. "I'm going to cry when I go home tonight."

Many of the plants that will close, like Doraville Assembly and the Lansing Metal Center, are more than 50 years old and date back to an era when G.M. held a commanding share of the American car market. As Asian competitors with lower labor costs and vehicles that many Americans consider more desirable have cut G.M.'s market share down to about a quarter of all American vehicles, the automaker has grappled to regain its competitiveness. Closing under-used plants and trimming its work force is one way it hopes to do that.

For cities like Lansing and Flint, Mich., that have for decades looked to the American auto industry to provide much of their livelihood, G.M.'s downsizing means the end of an era in which generations of families could depend on steady work at a car company and a generous retirement plan after 30 years of service.

"It used to be our kids would come in here and follow us, but that's not the trend anymore," Mr. McCoy said. "I just think it'd be nice if General Motors could get everything together, get it fixed and get going again."

Alvin Jones, 59, a line worker at the metal plant, has 40 years of experience but said he resented the idea of taking a retirement buyout. "Once you take the buyout, what's going to be left for you to do?" he asked. Mr. Jones moved to Lansing from the South in the mid-1960's to take a job with G.M. that he assumed would be his as long as he wanted to work.

Throughout his four decades at G.M., Mr. Jones said he had seen the domestic auto industry at some of its highest and lowest points. As he stood outside the Lansing metal plant on Monday and absorbed the news his plant would be closed, he said, "I've never seen it this bad, and I've been around for a lot of years."

Daniel Crane, 27, who installs glass on minivans at the Doraville plant, criticized G.M. for not making cars that sell well. "Who buys a minivan?" he asked. "G.M.'s not coming out with a product anybody wants."

As news of billion-dollar losses, job cuts and benefit reductions has rolled out of G.M. with alarming regularity this year, some workers said they saw the writing on the wall well before Monday. "Everybody in the G.M. system is trying to speculate on where they stand," said Mr. Fairbanks, the Lansing union president. "A total surprise? No. Not with the way things are going."

They are the latest in a series of blows to the company after technology bloggers disclosed this month that in its efforts to curb music piracy, Sony BMG had embedded millions of its music CD's with software designed to take aggressive steps to limit copying, but which also exposed users' computers to potential security risks.

The copy-protection software, called XCP, was bought by Sony BMG from a British company, First 4 Internet, and was installed on 52 recordings, totaling nearly five million discs, according to the music publisher, which is jointly owned by Sony and Bertelsmann.

In response to the concerns, the company posted a public apology on its Web site last week, began recalling the affected CD's from retail and warehouse shelves and offered restriction-free versions of the CD's - as well as MP3 files - to consumers in exchange for purchased CD's carrying the XCP software.

In a telephone call yesterday, Daniel M. Mandil, general counsel with Sony BMG, said that the company was "very keen to open up a dialogue with the Texas attorney general's office." And Thomas Hesse, Sony BMG's president for global digital business, added that "as a company, we are deeply committed to fixing this problem, and we are doing everything we can to get this right."

Cory Shields, a Sony BMG spokesman, also said that in mounting the recall and exchange program, the company had already responded substantially to concerns raised by the Electronic Frontier Foundation.

The class-action suit filed by the foundation in State Superior Court in Los Angeles County yesterday, however, takes aim at a much broader range of Sony BMG titles than those identified in the recall - including 20 million CD's that used copy-protection software from another company, SunnComm International of Phoenix.

Sony BMG contends the SunnComm software has been installed on only 12 million CD's. In a letter to the foundation on Friday the company stated that while it would be "reviewing its use of copy protection on all of its compact discs," it did not believe that the SunnComm discs needed to be removed from the market.

Cindy Cohn, the legal director for the foundation, however, said that both the First 4 Internet and SunnComm copy-protection systems, at the very least, violated consumers' rights by failing to disclose properly what sort of software would be installed when they listened to the CD's on their computers, and what exactly that software would do.

Users do have to accept "license agreements" that appear on their computer screens before playing CD's protected by the First 4 Internet and SunnComm software, but the foundation called the terms of those agreements "outrageous" and "anti-consumer."

Only consumers playing the discs on Windows-based PC's are known to be affected by the copy-protection programs. Studies have shown that about 36 percent of CD buyers listen to the discs on a computer.

Meanwhile, the Texas suit against Sony BMG, which refers only to the copy-protection software developed by First 4 Internet, seeks $100,000 per violation of the state's Consumer Protection Against Computer Spyware Act, which was passed by the Texas Legislature last spring and went into effect on Sept. 1.

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