Taoiseach urges EU to lighten €64bn debt

Taoiseach Enda Kenny has warned that December’s budget would be the harshest so far but, regardless of cutbacks, the country needs the EU to deliver on a promise to help lighten the massive €64bn bank debt.

Mr Kenny joined forces with the Italian and Spanish leaders to push Germany to agree to a single banking supervisor for the eurozone — essential if Ireland is to cut the cost of part of the debt.

Mr Kenny conceded that he will not get a deal as hoped next month. A stumbling block is the interest holiday on the €32bn Anglo promissory note, he said.

The Government wants to ensure any agreement with the ECB does not just shift the debt to the State’s balance sheet.

With the latest figures for the past quarter showing the sharpest drop in the domestic economy in two years, Mr Kenny said it presented real challenges for people but the budget 2013 would be “the most challenging of this Government’s remit”.

This makes it all the more important that EU leaders follow through on the decision made in June to break the link between bank and sovereign debt, create a banking union and, in so doing, stabilise the eurozone, he said, claiming this must be an “immediate priority for the EU”.

“Swift implementation of these decisions will demonstrate to international investors and others that the leaders of Europe are committed to the protection of our common currency... Delivery on these key decisions is so vital for the future of all our economies,” he told a gathering of centre-right government leaders and politicians in Rome.

“As a programme country, we have delivered the programme demands in full and on time even though it presents enormous challenges for our people. But if we are to build and grow we must have stability and growth in the eurozone.

“That is why delivery on the key decisions is so vital and so important for the future of all our countries and that’s the essence of what political decisiveness and political clarity should be about.”

Mr Kenny held an hour-long meeting with Mario Monti, the Italian prime minister.

“Ireland and Italy are very much of the view that this is very important and that all possible must be done to make this a reality, because of its impact on a number or countries including Ireland,” said Mr Monti.

Spanish prime minister Mariano Rajoy was equally insistent: “There is no reverse gear in the EU, so we must continue to move forward together,” he said.