France scuppers hopes of cut in bailout interest rate

FRANCE has scuppered hopes of an immediate cut in bailout interest rates after the row over Irish corporation tax levels re-ignited.

Europe Minister Lucinda Creighton admitted it was “unlikely” Ireland would get the expected 1% cut — which would have saved taxpayers €450 million a year — at next week’s meeting of EU finance ministers in Germany.

The news emerged as Greece came to a standstill following a national strike against new austerity measures imposed by the government as it grapples with a mounting debt crisis and increased pressure regarding its EU/IMF bailout.

The setback for Ireland came despite European economic and monetary affairs commissioner Olli Rehn and others having said in recent days that they expected an interest rate deal to be concluded “very shortly”.

French demands for an increase in Ireland’s 12.5% corporation tax were attacked as unrealistic by Ms Creighton. “To take away one of the really essential pillars of our economic policy, which is critical to achieving growth, would be absolutely counter-productive, not only for Ireland, but also for the eurozone and the EU.”

It had been widely thought Ireland would see its 5.8% interest charges cut by 1% at the summit, but Germany is also keen to see a shift in Dublin’s corporation tax policy, as well as the French.

After an hour-long meeting with her French counterpart, Laurent Wauquiez, in Paris, Ms Creighton claimed that Ireland’s corporation tax message was “getting through”.

However, this seems to fly in the face of earlier hardline attitudes expressed by Mr Wauquiez when he accused Ireland of being engaged in “fiscal dumping” at the expense of other EU countries.

Ms Creighton pointed to the fact that Greece had already been granted a reduction in its loan rates. “It would be quite bizarre for Ireland to be on a different rate than Portugal and Greece.”

She claimed the unfolding crisis over Greek debt had complicated the issue of Ireland’s interest rate.

“The Greek situation is making other member states more uncomfortable because they’re beginning to question how much its going to require and there is concern about that,” she told RTÉ.

Paris is keen to see Ireland concede ground on the issue of creating a common corporate tax base in the eurozone, as well as a shift on the 12.5% rate.