Negotiators get reality check from finance experts

NEGOTIATORS trying to hammer out a Fine Gael/ Labour programme for government have been given a sharp reality check by the state’s top financial experts.

National Treasury Management Agency chiefs briefed the negotiating teams with a stark assessment of the country’s true financial position.

Labour deputy leader Joan Burton described the meeting as “sobering” and Fine Gael finance spokesman Michael Noonan expressed concern about the state of the situation which was laid out.

With concern rising that the horse-trading could go into the weekend and down to the wire of Labour’s planned delegate convention needed to ratify any deal on Sunday, the two sides broke off from the talks to receive the in-depth look at the scale of the financial crisis the next government faces.

It followed on from briefings by the Central Bank governor Patrick Honohan and the secretary general of the Finance Department as bridging the gap between the two parties’ economic policies dominated the second day of negotiations.

New Exchequer figures also added to the gloom as they revealed how a major drop in VAT returns powered a €128 million collapse in the expected tax take for the first two months of the year.

However, tax returns were up by just more than €100m compared to the same period last year and the Exchequer deficit at the end of February stood at €1.9 billion — down from €2.4bn last year.

With both party leaders abroad tomorrow, time pressure increased on the deal makers.