EU ECONOMICS commissioner Olli Rehn has indicated that for the time being he will not be asking the Government to intensify the €3 billion austerity programme foreseen for next year’s budget.

As he reiterated the European Commission’s approval yesterday of the €4 billion package in the budget for 2010, Mr Rehn suggested the current plans were in keeping with the target of bringing the budget deficit within the 3 per cent EU limit by 2014.

As the EU executive met in Strasbourg, Mr Rehn attacked Moody’s downgrading of Greek debt to junk status during a debate in the European Parliament.

“Moody’s decision came at quite an astonishing and unfortunate moment,” he said. “Moody’s decision does not in any way take into account Greek commitments or the negative consequences, which were considerably reduced following the adoption of the programme.”

Mr Rehn warned one month ago that he was examining whether Minister for Finance Brian Lenihan should make further cutbacks in the light of efforts by the European authorities to dampen a huge rise in public debt in the euro zone.

Mr Lenihan had insisted he was under no pressure to adopt measures over and above the current medium-term plan, but Mr Rehn waited until yesterday to deliver a positive result from his examination. Ireland was among 12 euro countries to receive approval from the commission yesterday for taking “effective action” to address their deficits this year. “We assess at this stage that Ireland is on track and it is essential that Ireland will indeed implement the planned measures and ensure that the targets will be substantiated with these concrete measures to continue this path of adjustment,” the commissioner said.

Asked whether he wanted the Government to intensify the €3 billion austerity plan Mr Lenihan has promised in the 2011 budget, Mr Rehn said: “This amount is broadly in line with the target for next year and with the path of adjustment which has been decided for Ireland.” He went on: “The Irish authorities have implemented a very significant package of fiscal consolidation this year, amounting to 2.5 per cent of GDP , which mainly covers the expenditure side, in order to achieve the 11.5 per cent of GDP target.

“Overall, the net deficit reduction thrust for this year, 2010, is estimated at 4 per cent of GDP, including the full-year effect of measures taken in 2009.”

He was speaking as the commission signalled approval for new austerity measures and targets undertaken by the Spanish and Portuguese governments, which have come under considerable market pressure due to indebtedness. “Spain and Portugal are expected to specify measures in their 2011 budgets amounting to 1.75 per cent and 1.5 per cent of GDP respectively in order to attain the new targets,” Mr Rehn said.

With Ireland paying a higher yield than in March, as it sold €1.5 billion in bonds yesterday, Spain also found itself paying an increased risk premium in an auction yesterday. Although demand was solid as Madrid raised just above €5 billion in 12-month and 18-month bills, the average yield was 0.7 of a percentage point higher than an auction last month.

Madrid has denied German newspaper reports it is preparing to seek emergency financial aid from European authorities but has acknowledged its banks face significant funding difficulties.