EU rules to classify certain investments are posing a “significant threat” to the ability to fund major projects in housing, transport and water, Taoiseach Enda Kenny has said.

In a letter to Jean Claude Juncker, the president of the European Commission, Mr Kenny has raised concern about how European authorities could prevent further infrastructural investment.

In his letter, seen by The Irish Times, Mr Kenny said investment in infrastructure in Ireland was at its "lowest level for many years, and also represents the lowest level of any member state at present".

While Mr Kenny commits to obeying overall EU fiscal rules, he said recent decisions by Eurostat, the EU ratings agency, have been inconsistent and caused confusion.

Barriers

The Taoiseach’s letter reflects a frustration at Government that while Mr Juncker has advocated the need for greater infrastructural spending across the EU, barriers remain for countries like Ireland to do so.

Mr Kenny said he felt sufficiently concerned about how Eurostat was classifying public-private partnerships – widely used to fund infrastructural projects – that he felt the need to “raise the matter at the highest political level”.

A recent move by Eurostat that could put projects developed through public-private partnerships, generally used to keep capital investment off the State balance sheet, back on State books has caused concern in Government.

Mr Kenny said “there is an absolute need for consistency and transparency” from Eurostat.

“In Ireland investment in key infrastructure has been severely curtailed as a result of the economic crisis of recent years and the consequent fiscal adjustments which had to be made.

“We are also acutely conscious of the constraints and obligations of the fiscal rules, and the need to broaden sources of investment as widely as possible within those constraints and obligations.

Funding

“While the increased availability of funding at affordable cost is very welcome, we also need to be able to plan for its deployment in a predictable, transparent and effective manner.

“I look forward to hearing your views on how we can ensure full transparency and consistency in the application of the fiscal rules, while at the same time seeking to maximise the investment opportunities available to us and so badly needed in so many areas.”

Fine Gael Dublin MEP Brian Hayes said there should be leeway for capital spending since Ireland had been in a bailout. "We do need flexibility, but the flexibility should apply on the capital investment side."

Organisations such as the Irish Fiscal Advisory Council, the European Commission, the European Central Bank and Ibec have all stressed the need for capital investment.

There has also been criticism of the application of EU fiscal rules from Labour, Fianna Fáil and Sinn Féin.