Noonan doesn’t dismiss €200m cuts idea

Jeroen Dijsselbloem

Ireland could be in for a much kinder budget than planned in October, but Finance Minister Michael Noonan said he will wait for more figures about the economy before making any decisions.

He described the statement by Ibec, the employers’ organisation, that he needed just €200m of consolidation, 90% less than the expected €2bn, as a “guesstimate”, but he did not dismiss it out of hand.

“Ibec are ahead of the facts at this stage. They may turn out to be right but there is not enough data in yet to talk about it,” he said in Brussels where he was attending the monthly euro-group ministers meeting.

“Certainly, we won’t have to adjust by €2bn,” he said, adding that the Government will do whatever is necessary in expenditure cuts and taxes to get the deficit below 3% of GDP next year.

Mr Noonan also hopes for greater flexibility from the European Commission in its recommendations on the national budget, saying that it did not need to pay so much attention to the details.

Italy is pushing for much greater flexibility saying that money spent in a range of areas that should stimulate growth should not be counted towards the 3% deficit rule.

“In terms of the rules being interpreted to allow national governments more discretion over their own budgets, it would be helpful for Ireland. We don’t think we need to have the “t’s” crossed and the “i’s” dotted on every issue by the European Commission,” he said.

Under the budget rules, known as the 2-pack, investment by governments may be allowed to generate growth but the debate on what qualifies as investment will be discussed by ministers today.

However, Germany is still insistent that such flexibility can only be considered after a country has righted its deficit and debt situation. While Italy is one of the few with a deficit below the 3% its debt of around 130% is among the highest.

German finance minister Wolfgang Schaeuble said there was no intention of modifying the stability and growth pact. Instead, growth could only be stimulated through implementing structural reforms.

Eurogroup president Jeroen Dijsselbloem said that any flexibility must be within the rules.

The Commission also recommended to 11 countries that they tax labour less, easing pressure on companies to pay more and improving competitiveness. They recommended that Ireland broaden its tax base.

The meeting agreed that taxes should be cut and the reduction in income to the State be made up through cuts in spending on State-provided services or through increasing consumption taxes such as Vat, property or environmental taxes.

On the asset quality review being carried out into banks, Mr Dijsselbloem said that there were now 6,000 people working on it and it would be finalised by October before the European Central Bank took over the role and instigated the single supervisory mechanism.


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