Europe will not take assurances at face value

FRESH warnings from the EU that Government cuts might need to be more severe than those already indicated is another reminder that all is still far from well with the national finances.

Brian Lenihan’s assertion after the last budget that we had turned a corner has not been taken at face value by the European Commission. It is a concern that the projected economic growth figures could prove too optimistic and that further cuts in spending will be needed to ensure we get back to a 3% GDP deficit by 2014.

Irrespective of whether Lenihan was right we can take comfort from the positive reaction from the markets that this country takes its international obligations seriously. That was reflected in the latest bond issue when the Government borrowed €1bn on Tuesday through the NTMA.