EC rejects call to extend deadline to control Ireland's finances

The European Commission is rejecting calls for an extension to Ireland's deadline for getting its finances under control.

It follows a call from the ESRI for the Government to extend the 2014 deadline by at least two years.

The think tank is warning the plan to reduce the budget deficit to 3%t over four years could lead to a prolonged recession.

In its autumn quarterly economic outlook the ESRI accepts it is critically important Ireland addresses the crisis in the public finances, but it says the time frame of four years - as agreed with the European Commission - is too tight.

Research Professor Alan Barrett said he has grave concerns about the impact of the scale and speed of the plan.

The think tank yesterday urged the Government to extend the deadline by at least two years to 2016, allowing for a lower scale of annual adjustments, but conceded a change is unlikely.

It also acknowledged that this would mean the Croke Park Agreement would have to re-examined.

However, the proposal was effectively shot down last night when EU Economics Commissioner Olli Rehn said the European Council was the only body that could change the target of 2014.

A spokesperson for Mr Rehn said the 2014 deadline had been agreed before Ireland's European partners and could only be changed in a similiar manner.

Meanwhile, Finance Minister Brian Lenihan said an extension may be possible after a few years, but that seeking an extension in Europe now would be "devoid of any credibility".