A €6 BILLION adjustment in December’s budget would be too large a cut, the Labour Party told European commissioner for economic and monetary affairs Olli Rehn in Dublin yesterday.
Mr Rehn has endorsed the Government’s four-year plan involving an adjustment of €15 billion, as well as its decision to frontload an adjustment of €6 billion in the December budget.
Labour’s finance spokeswoman Joan Burton said Mr Rehn asked her to confirm the party’s position that it agreed with the target deficit of 3 per cent of gross domestic product (GDP) by 2014.
“He didn’t ask for any other specific commitment but he gave the commission’s views in relation to adjustments and so on that they consider desirable,” she said.
“But our view is very much that while Ireland has responsibilities to Europe and to the euro zone, the European Union has responsibilities towards Ireland.”
Ms Burton said she told Mr Rehn the banking crisis and the Government’s handling of it was the principal reason the financial markets continued to lack confidence in Ireland. She said there could be no economic recovery unless the budget contained a strategy for growth, employment and job retention.
She was accompanied by Labour’s European affairs spokesman Brendan Howlin and MEP Alan Kelly when she met Mr Rehn at the European Commission’s office in Dublin yesterday morning. Mr Howlin said €6 billion of budgetary cuts would “stifle growth”.
Fine Gael finance spokesman Michael Noonan met Mr Rehn earlier.
He said Mr Rehn had said “the €15 billion correction is not a fixed figure. That will be revised from year to year . . . Europe in effect will be renegotiating the €15 billion correction over the four years, so that’s not fixed, whereas the €6 billion is fixed as his target,” Mr Noonan said.
He said a jobs and growth package should operate in parallel with the fiscal correction.
“I had no difficulty in committing Fine Gael once more to achieving the 3 per cent target under the Stability and Growth Pact by 2014 and I had no problem in committing Fine Gael either to aiming at a correction in the next budget to bring the deficit below 10 per cent.”
Mr Noonan said he told Mr Rehn an election putting in place a government with a significant majority would give stability to the country. “Naturally he wouldn’t comment on the Irish political situation, but I think it was important to set that out.”
Mr Noonan added: “He certainly wasn’t asking us to go in and vote for the budget.”
Sinn Féin’s leader in the Dáil, Caoimhghín Ó Caoláin, said he told Mr Rehn his party did not believe the 3 per cent target could be reached by 2014.
Mr Ó Caoláin said the level of austerity measures being proposed would “kill confidence” in the economy. He said Mr Rehn had given an undertaking to study Sinn Féin’s view further.
