Commissioner gives cautious welcome to ‘stabilisation of public finances’
European Economics Commissioner Olli Rehn, who first demanded the detailed plan earlier this year to prove to the markets that Ireland could make the necessary adjustments, described it as an important contribution to the stabilisation of Irish public finances.
He said it would “strike a balance between allowing the nascent recovery to strengthen and addressing budgetary challenges in a timely fashion”.
But he reminded the Government that this is not the final word on the measures needed over the next four years to reduce the budget deficit to 3% of GDP by 2014.
Rather, he emphasised that the plan was a sound basis for the negotiations under way with the Commission, the ECB and the IMF on the fiscal and structural reforms needed in return for loans of about €85 billion.
Labour MEP Proinsias De Rossa said the plan was entirely detached from EU policy reality as it does not include any of the objectives Taoiseach Brian Cowen and other EU prime ministers signed up to in the EU2020 strategy.
“It’s as if the Government set out a four-year plan on the future of Irish agriculture without mentioning the Common Agricultural Policy,” he said. The plan did not set out how the country would achieve 75% employment among 20–60-year olds, nor did it link into Commissioner Máire Geoghegan-Quinn’s innovation proposals.
While the Taoiseach’s fellow eurozone leaders can be expected to welcome the programme, they and their finance ministers will be concentrating on the final document to emerge from the negotiations with the EU-IMF, due to be finalised in the next few days.
They are also worried that the markets are less than satisfied with Ireland’s condition, pushing up the cost of borrowing and insuring against default despite the four-year programme, and they are also turning their attention to Portugal.
The head of Austria’s central bank Ewald Nowotny, who visited Ireland recently, said the Irish tax system “now needs to be cleaned up. It is possible and if (it happens) I see a very positive perspective for Ireland”, he said, despite the Government ruling out any change to the corporation tax rate.
The Slovak finance minister, Ivan Miklos, mentioned that most dreaded of subjects, the break up of the eurozone, when he noted that, “even in the current conditions which are very tough, very complicated and, when the risk of a eurozone break-up, or at least its very problematic functioning, is very real, despite all that Estonia will become a member in January”.
