EU 'flexible over €15bn cuts target'

The European Commission has offered the Government some flexibility over the €15bn four-year spending cuts target, it was claimed today.

Fine Gael said EU Commissioner Olli Rehn stressed the massive multibillion figure was not cast in stone and could come down if the economy grows faster than predicted.

But the party’s finance spokesman Michael Noonan said the top EU politician warned next month’s €6bn slash-and-burn budget was non-negotiable.

“Significantly, Commissioner Rehn has agreed with Fine Gael that the Government’s own €15bn figure for the four year adjustment could change,” Mr Noonan said.

“And he stated that the scale of the fiscal adjustment would be reviewed every year.”

On the final leg of his two-day trip to Dublin, Mr Rehn held separate meetings with Opposition parties, employers and trade union leaders.

He also addressed the Institute of International and European Affairs where he predicted Ireland would pull itself out of the crisis.

“It might feel a small consolation at times like these, but I have no doubt that Ireland too will overcome this crisis,” Mr Rehn said.

“You are smart and stubborn people. Time and again you have proved you can overcome adversity.

“And this time you do not face the challenges alone. Europe stands by you.”

After talks with Finance Minister Brian Lenihan last night Mr Rehn called for political support for the tough budgetary measures.

The Green Party, which proposed the failed cross-party talks on the economy last month, tonight suggested negotiations should be kick-started again.

Communications Minister Eamon Ryan said: “The most important signal we can send to Irish citizens and to the markets from whom we must borrow next year is that our political leaders have a shared understanding of the scale of the economic challenges facing us and that we are united in our determination to put aside partisan politics in the national interest.”

Mr Noonan said Mr Rehn told him it would be important that political parties agree similar approaches to the crisis.

“He certainly wasn’t asking us to go in and vote for the budget,” Mr Noonan said.

“This Government has a majority and if they’re refusing to have an election, well then they must be confident that they can maintain their majority.”

Joan Burton, Labour Party finance spokeswoman, said she told Mr Rehn her party backs the target of slashing the budget deficit to 3% of the value of the economy by 2014.

“Our view is very much that while Ireland has responsibility to Europe and to the eurozone, the European Union has responsibility towards Ireland,” Ms Burton said.

Caoimhghin O Caolain, Sinn Féin Dáil leader, told the Commissioner to go back and tell Europe that Ireland cannot cut its budget deficit by 2014.

“I and my colleagues, Deputy Arthur Morgan and Mary Lou McDonald, this morning informed the European Commissioner Ollie Rehn that Sinn Féin will not be part of any consensus that seeks to cut €6bn from the economy next year, hitting low earners and vital public services hardest,” Mr O Caolain said.

Business lobby group Ibec claimed enterprise remained resilient, diversified and well-positioned to drive recovery.

Director general Danny McCoy said: “Ireland has a strong enterprise base and doesn’t face the same need for fundamental structural reform as other economies but it is essential that we maintain a strong incentive to work.”

Congress general secretary David Begg said he emphasised to Mr Rehn that despite three tough budgets the situation was getting worse.

“The one thing I do know with absolute deep conviction is that the approach being adopted now in this austerity package by the Government will not succeed, tragically, and will damage the economy and lead us into the type of longer depression such as the Japanese went through in the 1990s,” Mr Begg said.