Resist calls to spend more, say EU and ECB

The European Commission and the ECB have slapped the Government’s wrists over its spending of corporate tax windfalls and urged it to resist calls to spend more as part of any “recovery dividend”.

In its so-called post-programme report on Ireland, the seventh since the country emerged from the EU-IMF-ECB troika bailout, the staff from the Commission and the ECB said the Government should have paid down debt instead of spending the proceeds of an unexpected bounty in corporate tax revenues in 2015 and 2016.

The report also warned that though the financial health of banks has improved they still have elevated levels of long-term non-performing mortgage loans. The Government received huge windfalls from corporate tax revenues in the past two years, which helped it boost the size of its last two budgets. The largesse was funded by multinationals moving significant amounts of intellectual property rights and contract manufacturing into Ireland as part of their rearranging their global tax affairs, say analysts.