Tánaiste Joan Burton criticises ‘frustrating’ EU fiscal strictures that limit investment

Tánaiste Joan Burton has hit out at EU spending rules branding them as “frustrating” and claimed they are limiting the Government’s scope to invest in much-need, long-term projects.

Ms Burton said EU fiscal rules are holding back capital investment at a time when Ireland can borrow at record low interest rates.

As a country that is suffering from a lack of investment over the past numbers of years, these constraints are particularly problematic, Ms Burton said.

“As you know, Ireland is currently able to borrow on the international markets at very low rates of interest,” she said. “In that context, it is frankly frustrating that we are prevented by eurozone fiscal rules from doing more in the way of direct investment by the State.

“As things stand, the spending rules do not distinguish between current and capital spending… It is important that the rules allow for investment in the productive capacity of the economy, especially so in countries like Ireland which are trying to make up for a lack of investment in the past.”

The Labour leader said she fully understands the motivation behind the fiscal rules and is committed to abiding by them as the Government’s efforts to reduce the national debt show.

Ms Burton’s comments echo those by business body Ibec earlier this year when it argued that EU rules could undermine the country’s economic recovery.

They also argued that the Government’s investment capacity is unduly restricted by the rules to such an extent that it jeopardises progress in areas such as housing and broadband provision.

In light of these restrictions, the Tánaiste highlighted the need to leverage private sector funding to complement the government’s outlay.

“In that context, it is all the more important that we secure private sector investment in infrastructure and the plan sets ambitious targets in this regard,” said Ms Burton.

“In the past, Ireland has successfully utilised public-private partnership approaches to fund infrastructure delivery.”

The Government unveiled its €27bn six-year capital plan in September to provide for major infrastructure projects.