| EU to put squeeze on Ireland! -Irish |
EU warns it may seek further cutbacks from Ireland this year
ARTHUR BEESLEY European Correspondent in Brussels
EU ECONOMICS commissioner Olli Rehn has warned he may seek further cutbacks from the Government this year as the European authorities take new steps to clamp down on a massive rise in public debt in the euro zone.
As fallout from the Greek debt crisis weighs on the euro, Mr Rehn said he was examining whether Dublin should adopt new austerity measures, and would conclude his review within three weeks.
He was speaking after the monthly Ecofin meeting of EU finance ministers at which many participants expressed reservation about proposals from the European Commission to open member states’ outline budgets in Brussels before national parliaments.
“I’m sure that Ireland will be one of the countries in focus before we discuss fiscal consolidation in June in the Ecofin,” Mr Rehn told reporters.
Asked if this meant he would ask Minister for Finance Brian Lenihan to adopt additional austerity measures this year, he said he would be ready to respond to that question “shortly”, but must first analyse more profoundly Ireland’s fiscal balance and debt development.
“Ireland will be, of course, closely followed because of its recent debt dynamics, and we will make a comprehensive assessment – also on Ireland – in the context of the mid-term budgetary review for June in a few weeks.
“We are certainly looking to Ireland. Ireland early on took substantial measures of fiscal consolidation which helped to bring down the spreads for Ireland, but there is a constant need to stay vigilant.”
The review comes as the commission makes new efforts to tackle a big increase in public indebtedness as euro governments struggle to balance their books.
The single currency traded near its lowest in four years against the dollar amid concern that states with the highest deficits will struggle to meet EU austerity requirements.
Against the US currency the euro fell 0.7 per cent to $1.2315 before trading at $1.2355 at noon in New York.
Mr Rehn believes the refinancing difficulties faced by Spain and Portugal in recent weeks show that fiscally-weak countries will be under escalating pressure to reduce their overall indebtedness as they borrow from private markets.
This marks a tacit shift for the commission, which previously concentrated its consolidation effort on the drive to get governments to reduce their budget deficits below the 3 per cent EU threshold.
Ireland’s debt to gross domestic-product (GDP) ratio has risen steadily as recession took hold, increasing from 25 per cent in 2007 to a forecast 77.3 per cent this year and to 87.3 per cent in 2011.
In Brussels on Friday, euro ministers will try to iron out technical and legal questions linked to the creation of the €440 billion rescue fund for distressed members of the single currency.
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