EU ECONOMICS commissioner Olli Rehn has expressed confidence in the Government’s capacity to confront the financial challenge it faces.

Although there is concern in Brussels at the rising cost of rescuing Anglo Irish Bank, Mr Rehn dismissed any suggestion the fiscal pressure on Ireland or Greece would result in a restructuring of their debt.

Mr Rehn’s spokesman said the EU Commission was “monitoring closely the situation” but said he had “no particular announcement to make at this point in time”.

Neither Ireland nor Greece will default, Mr Rehn said in Tallinn at an event to mark Estonia’s adoption of the euro next year. “They have taken effective and determined action by means of financial repair, by means of fiscal consolidation and by means of structural reform,” he said.

“More needs to be done but Greece is on track and Ireland is on track, so there will be no restructuring. I have full confidence on Ireland and its capacity to act with determination to complete the financial repair and the necessary restructuring of the banking and financial sector.”

Mr Rehn’s remarks came as Central Bank governor Patrick Honohan called for an “explicit reprogramming” of the budgetary profile for the coming years.

The commissioner’s spokesman said there was no question of clemency or sympathy as regards the 2014 deadline on the Government to bring the deficit within the EU limit of 3 per cent.

“This is not an issue for clemency. There is something called the excessive deficit procedure, the Lisbon treaty, the stability pact and I understand the word clemency isn’t included in the language contained in those provisions,” the spokesman said.

He said the commission welcomed renewed commitments from the Government to correct the deficit within the agreed timeframe. “Of course this will require a sizeable consolidation effort which will have to be continued over the next years and will have to be reflected for instance in the budget of next year.”

He acknowledged the capital injections into Anglo have added to the Government’s burden. “It’s obvious, and that of course makes the effort even more challenging for the Irish authorities, but we are welcoming the fact that the Irish authorities themselves confirmed that they are standing by these targets,” he said.

“When it comes to public accounts . . . we have to note first of all that, until now, the Irish authorities have swiftly reacted to the financial and economic crisis and its impact in public accounts. So they have taken important steps, very important steps to stabilise the public finances with the five consolidation packages which have been adopted since mid-2008, which was right before the beginning of the big financial crisis which erupted in September 2008.”

Meanwhile, Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), the emergency loan vehicle set up by eurozone countries to contain the region’s sovereign debt problems, will probably not need to be activated, despite the steep rise in some bond spreads.

On the day the EFSF received a triple A rating from all three main credit agencies, Mr Regling said the fund was not considering any “mock” issues to establish itself on the markets.

“The central scenario for me and eurozone finance ministers is that we don’t need to become operational,” said Mr Regling, a former European Commission official who also worked for the International Monetary Fund and the German finance ministry. – (Additional reporting, Reuters)