Delay in government formation may increase borrowing costs - Noonan

Monday 07 March 2016 18.50
Michael Noonan said if a government was not formed for a 'significant period' anxiety would begin to appear in the markets
Michael Noonan said if a government was not formed for a 'significant period' anxiety would begin to appear in the markets

Minister for Finance Michael Noonan has warned that if no government is formed for a "significant period" then it could increase Ireland's borrowing costs.

Speaking on his arrival at a eurogroup meeting in the Brussels, Mr Noonan said: "On everything I've read and been briefed on there isn't any international anxiety but we'll see what happens.

“Obviously if a government wasn't formed for a significant period then anxiety will begin to appear in the markets and would be expressed in bond prices," he added.

Mr Noonan repeated Fine Gael's demand that there remain a national utility for water and that it be charged for.

He also said that under European law Ireland was obliged to charge consumers for water.

He said: "There was a derogation up to 2010 where Ireland wasn't obliged to charge for water, but the derogation was ended by the FF-Green government, so legally now under European law water must be charged for in Ireland.

"Fine Gael's position is we want a national utility for water rather than it reverting to local authorities and we want water charged for, and it's within that space that any discussion with a future partner in government will have to take place."

When asked if Fine Gael was prepared to compromise on the issue ahead of any discussions on forming a government he said: "Not on the structure but there are issues around the edges that could be discussed."

On the formation of the next government, Mr Noonan told reporters: "The important thing now is to form a government in Ireland as quickly as possible - that's what is in the national interest.

"The personalities are secondary to the national objective of having a government that reinforces confidence in Ireland and makes sure that we can continue with the very successful progress that we had made, especially over the past two years.

"There are no talks about a grand coalition yet, there's a certain amount of speculation.  I don't think anything significant will happen on Thursday, but Thursday will have to be put behind us first."

He said the incoming government would have to stick to the boundaries contained in the European Commission's Spring Economic Forecast.

Mr Noonan said there would be extra resources for capital expenditure thanks to the review of capital spending, which the outgoing minister Brendan Howlin had promised.

When asked if he took responsibility for the controversy over the "fiscal space" available to the government, Mr Noonan said there had been "no confusion" and that it had since been borne out that the Department of Finance had the correct figures.

"Those who said they weren’t the correct figures didn't have a shred of evidence. Everybody accepts now they were the correct figures."