The EU is desperate to get Ireland to sign up to the Lisbon Treaty.
This is hardly going to encourage the Irish people to change their
minds!
Christina aka Cassandra
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IRISH INDEPENDENT 3.11.08
European Commission concerned by Irish budget deficit
The European Commission is expressing concerns about the size of our
budget deficit.
Our public finances are expected to be in the red by 5.5% this year,
and 6.5% next year, which goes against EU stability rules.
The Government is to be asked to reduce borrowing levels to below 3%
of our GDP, and if it doesn't, EU authorities will take action
against Ireland.
Speaking in response to the news, Taoiseach Brian Cowen said: "It's
not that we're being targeted in fairness. There are rules under the
Stability and Growth Pact.
"There are other counties who have exceeded the 3% deficit in the
past and there's a procedure in place for monitoring and evaluating
that and working with the member state government, in this case
ourselves."
============ ========= ======
IRISH TIMES 4.11.08
Commission acts over Irish budget deficit
EU Commissioner for Economy and Monetary Affairs Joaquin Almunia,
from Spain, addresses the media at the European Commission
headquarters in Brussels yesterday. Photograph: Yves Logghe/AP
JAMIE SMYTH in Brussels
THE EUROPEAN Commission has said it will recommend opening an
excessive deficit procedure against Ireland because of its spiralling
budget deficit.
Economic and monetary affairs commissioner Joaquin Almunia announced
the decision yesterday at the publication of EU economic forecasts,
which predict the exchequer finances will be in a worse state than
the Government expects in 2009.
"In the summer there was a big surprise for everybody how the public
finance position in Ireland deteriorated very, very rapidly," said Mr
Almunia. "It is obvious now that the forecast is published that we
will start the procedures for an excessive deficit procedure."
Under the EU stability and growth pact, Union states are required to
keep their budget deficit to gross domestic product (GDP) ratio below
a 3 per cent limit. Moreover, they are obliged to maintain a debt/GDP
ratio below 60 per cent to ensure the smooth operation of the euro
currency. In theory a government could face financial penalties if it
failed to bring its deficit under control, although in practice no
member state has been forced to pay a fine after breaching the limits
in the pact.
The commission is forecasting an Irish budget deficit of 6.75 per
cent of GDP in 2009, which is a quarter of a percentage point more
than the Government's recent forecast. It also predicts the economy
will contract by 1 per cent in 2009, compared to a Government
prediction in the budget of a decline of 0.75 per cent.
Mr Almunia pinpointed the collapse of the Irish housing market and
the problems experienced by the banking sector for the severity of
the economic downturn. [Both caused by Ireland not being a suitable
country to join the Euro with its one-size-fits- all interest rates
and pegged currency. This caused an unsustainable boom and the
inevitable consequent crash! -cs]
Economic forecasts show the commission expects unemployment to reach
7.5 per cent in 2009. This figure would be higher except for a
predicted slowdown in immigration prompted by the downturn. Increased
borrowing over the next two years will cause the national debt to
almost double to 46 per cent of GDP in 2010, from under 25 per cent
in 2007.
On the positive side inflation is predicted to fall to 1.8 per cent
in 2010, down from 3.3 per cent in 2008, and the commission expects
the Irish economy to recover in the last quarter of 2009 and expand
by 2.4 per cent during 2010.
Ireland is not the only country facing a steep drop in economic
growth and widening budget deficits. Economic growth in the euro
currency area will slow to 0.1 per cent in 2009 from 1.2 per cent
expected this year, prompting the commission to warn that recession
was a real risk.
"The economic horizon has now significantly darkened as the European
Union economy is hit by the financial crisis that deepened during the
autumn and is taking a toll on business and consumers," said Mr
Almunia, who noted that he expected at least seven countries to
breach the 3 per cent budget deficit rule in 2009.
Greece, Latvia, Lithuania, France, Romania, the UK and Hungary are
all expected to exceed the terms of the EU stability and growth pact
in 2009 as the downturn takes hold. [Only Greece and France from
that lisy are in the Euro! -cs]
EU finance ministers meet in Brussels today to discuss how the
financial crisis is retarding economic growth amid calls for more co-
ordinated action. "We need co-ordinated action at the EU level to
support the economy similar to what we have done for the financial
sector," said Mr Almunia.
But Dutch finance minister Wouter Bos yesterday rejected the idea of
any EU-wide measures and said the main areas of economic policy co-
ordination were the EU budget rules, called the Stability and Growth
Pact, and the European Central Bank.
Tuesday, 4 November 2008
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