The Taoiseach has backed the stance taken by Finance Minister, Charlie McCreevy, in relation to the European Commission's reprimand of Ireland over public spending. Speaking in Cork, Bertie Ahern said that spending targets for the year had already been set and could not be changed now. The Commission wants the Government to cut spending by £400m before the end of the year.
The divergence of views between the European Commission and the Government over public spending here appears to be widening. Charlie McCreevy is sticking to his guns and the Taoiseach has backed his stance. He said that the European Commission's warning over inflation here did not make a whole lot of sense. But the Labour Party wants Charlie McCreevy to take remedial action to avoid antagonising the Commission.
The Commission has estimated that Ireland needs to cut its public spending plans by £400m to curb the inflationary nature of this year's Budget. Officials from the 15 member states and the Commission are negotiating the text of the reprimand to be debated by EU Finance Ministers next week. Last night, Mr McCreevy said that his position on the issue had not changed. Yesterday, the President of the European Central Bank took the Commission's side in its dispute with the Irish Government.
The issue of a formal reprimand is due to be decided by EU finance ministers' meeting of 12 February. Negotiations on the text to accompany the reprimand are already underway with all 15 countries, including Ireland, involved. The draft sent to Ireland last night has been seen by RTÉ News. It says that measures equal to half a per cent of GDP, that is £400m, would offset the inflationary measures in this year's budget.
The document says that Minister McCreevy should take what it calls "countervailing measures" this year. It does not say what specific actions he should take, although on Tuesday, Economic Affairs Commissioner, Pedro Solbes, wanted to list some. So the Government will welcome this change. On the reprimand issue, it seems inevitable that on 12 February, EU finance ministers will vote to censure Ireland. The big stick is going to be used, but the Government is making some progress on the amount of punishment to be delivered.
