Watchdog: Budget broke EC rules with pay deals

The budget Michael Noonan presented last month breaks European Commission rules and does not take into account potential additional spending under breaches to the Lansdowne Road public pay accords, the country’s fiscal watchdog has warned.

The Irish Fiscal Advisory Council (IFAC) said it estimates the State will likely spend €200m more than is justified under the Brussels key expenditure rule. It also found the Government provided little room for spending increases in the coming years, should the economy face further economic blows.

IFAC chairman John McHale — who is to step down in the coming weeks — said the breach was disappointing, as the EU rules aimed to stop conditions that led to the crash.

The State’s so-called fiscal space to 2021 was already “almost all” accounted for, said Prof McHale.

However, the watchdog acknowledged that despite the €200m breach, Ireland was unlikely to face a fine if the commission were to agree with its assessment.

The IFAC again warned the Government against relying on corporate tax revenues to fuel spending.