Rate cut: Banks must be penalised, say Labour
Banks will pay the Government a €100 million levy this year but this must be increased substantially if they refuse to give their customers the benefit of the latest ECB interest rate cut, according to Labour.
Finance Minister Charlie McCreevy was more cautious, but he did not rule out penalising banks in the next Budget if they fail to drop their interest rates.
“It could be on the agenda. I’m sure the banks are listening in as well and they don’t need to be reminded of it,” Mr McCreevy told RTE.
Only one bank, IIB, has so far passed on the 0.5% his interest rate cut to consumers - despite calls from the Tanaiste Mary Harney and the Irish Financial Services Regulatory Authority.
Mr McCreevy stressed yesterday the Government has no control over the level at which banks set their interest rates.
The Finance Minister went on to defend the Government’s handling of the economy since it returned to power a year ago.
He said they had to deal with the economy as it was and not as they would like it to be.
He said the economy is continuing to grow faster than any other European country and the rate of unemployment is below that even of the United States.
On the controversial €2 billion benchmarking deal, Mr McCreevy insisted three quarters of that money will not be paid to public servants unless there is proof of increased productivity.
A quarter of the benchmarking deal due to paid next month comprises back payments to December 2001 and will not be linked to productivity, the Minister said.
But the remaining 75% of the benchmarking deal due to be paid next year and in 2005 will be linked to productivity, Mr McCreevy insisted.
Special performance groups comprising independent observers and the secretaries general of each department have been set up to sign off on these agreements before the money is paid out.
“If there are not productivity changes there will be no balance of payments made,” the Minister said.
But Fine Gael insisted last night that there was not specific details on the targets civil servants are supposed to reach.
