The Minister for Finance has reiterated that the Government's budget strategy remains on course, despite yesterday's reprimand from the EU Council of Finance Ministers. Charlie McCreevy told the Dáil this afternoon that there would be no major expenditure or tax changes in the Finance Bill due to be published on Thursday.
Minister McCreevy said that the ECOFIN rebuke was not a proportionate or even-handed response, and was based on a misreading of the Irish economy. He also said that the Council of Ministers had not taken a vote on the matter, and media reports stating that other countries had voted against Ireland were incorrect. The Minister rejected opposition suggestions that his stance had damaged Ireland's relationship with its European partners; he said that he did not believe had squandered its political capital.
The Tánaiste has also defended the Government's budgetary policy in the wake of yesterday's reprimand. On Morning Ireland, Mary Harney said that there would be specific measures in the Finance Bill to be published on Thursday to encourage saving and thereby help reduce inflation. However, John Fitzgerald of the Economic and Social Research Institute said that Charlie McCreevy should not introduce the savings scheme, as it would act as a further stimulus to the economy.
Speaking on the same programme earlier, Mr Fitzgerald said that, if the scheme were introduced this year, it might provoke the European Commission further. Ms Harney rejected this analysis and said that the scheme would be introduced this year. Yesterday, Mr McCreevy defended the Government's economic policies, despite the rebuke by his EU colleagues. He said that there were a number of people who would say that the way we have conducted our economic affairs in recent years should be copied by more member states in the European Union. He said that this would lead to a much stronger European growth rate and a stronger euro.
European Union finance ministers in Brussels reprimanded Ireland formally over its inflationary budget policy. It is the first time that an EU member has been admonished in such a way. Mr McCreevy was the only dissenting voice. He said that the Government did not believe such a proposal was warranted. The reprimand is seen as a test case of the limits of national policymaking in the Eurozone. However, the EU ministers have no power to force Dublin to conform to the Commission's wishes.
