Labour and Fine Gael clash over figure of €6bn in cuts

A MAJOR clash over how to deal with the financial crisis erupted between Labour and Fine Gael as they demanded a snap general election.

Despite being the most obvious alternate government the two parties took starkly different attitudes on how to deal with the IMF as the prospect of taking power appeared to be close at hand.

Labour leader Eamon Gilmore warned that he would not let the IMF “roll over” a new administration as he stressed a pre-Christmas national poll would put the incoming government in a strong position with the country’s new international paymasters.

In the most serious policy clash between the two potential partners, Mr Gilmore insisted that talk of the need for €6 billion worth of cuts in the next budget was now redundant.

He argued that the figure was only produced in order to win the confidence of the money markets and had now been overtaken by events as it was clear the country would not need to go back to bond brokers for cash for the next three years.

However, Fine Gael indicated they were standing by their support for a fiscal adjustment of €6bn — and would not rule out the prospect of abstaining to allow a Fianna Fáil/Green budget to go through in two weeks’ time.

Mr Gilmore said the date of the budget did not matter, what was important was ensuring that it contained the correct measures.

He said that Labour and Fine Gael would most likely form the next Government, the only thing in play would be which was the bigger party in the presumptive coalition.

Labour has maintained the economy would not be able to sustain cuts of more than €4.5bn and now appears to be looking at a lower adjustment than that.

Deputy Fine Gael leader James Reilly tried to down-play differences between the two parties, pointing to the fact they had agreed on a joint economic programme while in government in the past and would be able to put together a coalition budget very shortly after any election victory.

Fine Gael leader Enda Kenny said the Green move had plunged the nation into further uncertainty and that only an early election would clear the air.

“What is needed now is an immediate general election so that a new government, with a clear parliamentary majority, can prepare the four-year economic plan, complete negotiations with the EU and IMF and frame a budget for 2011,” he said.

Sinn Féin Dáil leader Caoimhghín Ó Caoláin said John Gormley’s decision to quit the Government in January showed the Greens were preparing to “cut and run”.