EC urges Government to reduce Budget deficit

Monday 02 June 2014 22.48
The report on 26 EU countries was published in Brussels this afternoon
The report on 26 EU countries was published in Brussels this afternoon

The European Commission has urged the Irish Government to fully implement the current Budget and ensure additional structural measures are taken next year to reduce the deficit. 

The advice was part of a review by the EC of Ireland's economic performance, along with what are called "country specific recommendations."

It is one of seven recommendations published by the Commission today, which is part of an EU-wide economic review. 

The report also expressed concern about the Government's expenditure on health and argued the current property tax was too narrowly targeted. 

It said there is "further scope to improve the efficiency and growth-friendliness" of the Irish tax system.

On property tax, the commission found that "the tax base is still relatively narrow as certain properties remain outside of the tax net."

It said Irish moves to reduce VAT "are not an efficient and well-targeted policy tool to protect vulnerable groups."

This is the first time Ireland has been subject of such a review since exiting its EU-IMF bailout in December.

The Commission also zoned in on health spending, saying: "public healthcare expenditure [in Ireland] was among the highest in the EU in 2012 at 8.7%."

It said " financial management and accounting systems and processes are fragmented across healthcare providers."

The commission found that this "hinders the monitoring of healthcare expenditure and efforts to achieve value-for-money and an appropriate allocation of resources."

It said current service levels "can be maintained only if value-for-money gains are achieved over the medium to long term."

Responding to the report, a Government spokesman said: "Having exited our EU/IMF Programme, As such this is the first time that Ireland is receiving Country Specific Recommendations (CSRs) under the EU's stronger post-crisis economic governance arrangements.

“The draft CSRs will now be considered and discussed at various EU committees and subsequently endorsed by the European Council at the end of June and adopted by ECOFIN in early July."

The report on 26 EU countries was published in Brussels this afternoon.

Outgoing Commission President José Manuel Barroso, Economic and Monetary Affairs Commissioner Olli Rehn, Taxation Commissioner Algirdas Semeta and Employment Commissioner László Andor pusblished the report.

The only two EU countries which are not the subject of a review are Greece and Cyprus, both are still in bailout programmes.

However, Ireland, Portugal and Spain are also subject to what is termed "post-programme surveillance."

This involves EU officials visiting the countries twice-a-year until most of the bailout funds have been repaid.

Today's announcement is part of the EU's normal economic governance procedure which has been in place since 2011.

It is aimed at ensuring all Member States meet targets set for 2020.

Keywords: eu-imf bailout