Euro ministers say Ireland must cut deficit to 3%

IRELAND has no alternative but to cut the burgeoning government deficit back to 3% by 2013, euro group ministers agreed at their meeting last night.

This follows the European Commission’s forecast that says the deficit will widen further to 12% this year, by far the biggest in the euro zone.

While there was widespread praise for the tough steps the Government has taken in its latest budget to cut back spending and raise more money, the message was that there must be no let-up.

And plans to buy up the banks’ toxic assets were given the go-ahead by the ministers with the president of the euro group, Jean Claude Juncker, saying it was essential to do so to create confidence in the market and get credit flowing again.

Mr Juncker said that the euro area ministers and Finance Minister Brian Lenihan agreed on the need for the country to meet the euro zone rules, and reduce the deficit.

“Ireland’s fiscal deficit is very high. Ireland does not see any way around this and we do not unless they try very hard to get back within the 3% by 2013 and they are making very brave efforts.

“We take our hats off and pay tribute to the Irish people themselves in rising to the challenges and bearing the sacrifices the Government is asking them to make,” he said.

Mr Juncker, who is also Luxembourg prime minister and finance minister, admitted that he finds it difficult to be objective about Ireland.

“I love the country and the people and their sense of realism and pragmatism, but despite how much I admire the people, we certainly agree that the Irish situation is ultra-difficult, very complex,” he said.

The European Commission’s Economic and Monetary Affairs chief Joaquin Almunia also praised the Irish reaction.

“We hope for the country that was the best example of success and is now suffering the most,” he said.