McCreevy contends criticism was based on a false premise

The Minister for Finance has remained resolutely defiant in the face of an unprecedented rebuke for Irish budgetary policy by our EU partners.

Mr McCreevy argued strongly that the official censure recommendation agreed by all 14 finance ministers was wrong headed and based on a false premise. The recommendation, which calls on the Government to run larger surpluses and tighten budgetary policy, is not warranted and is not a proportionate or even-handed response, he said.

He was also dismissive of suggestions that Irish interest in other areas would be damaged by the row and insisted Ireland had not had any special treatment from the EU in five years.

Despite Mr McCreevy's strong words and robust defence of his policy, his fellow finance ministers have warned that the next Budget will be carefully watched by the European Commission in Brussels. Not one finance minister spoke in Ireland's favour at yesterday's Ecofin meeting and, speaking to journalists afterwards, Mr McCreevy gave no indication that he would take the official recommendation on board.

He listened to advice from a range of commentators and institutions including the Commission, he said, adding: "We will take on board advice from the ESRI, the economic community and the Commission the same way as we have always done."

Mr McCreevy was adamant that Irish policy was correct and that he wanted to ensure that the next three Budgets were as successful as the last three.

"We have an extremely successful economy, growth is strong, unemployment low, strong surpluses and low debt. Inflation is no longer the highest in the EU.

"The Budget was endorsed by the unions and without that agreement we could have had a wage price spiral which would have been far more problematical," he said. He also said Irish public expenditure was the lowest in the EU as a percentage of GDP. "Is anyone suggesting that we reduce old age pension or take £500 million out of the health service or don't invest in new roads or infrastructure?"

Mr McCreevy also dismissed suggestions that he could have worked harder to get the recommendation watered down further or even taken off the agenda. "It was clear we were not going to get any support ever since the Commission leaked the wrong document. There was nothing further we could have done. The Commission had made up its mind well in advance."

But there appears to be little the Commission or finance ministers can actually do to influence Mr McCreevy. Economic Affairs Commissioner Mr Pedro Solbes, who drafted the recommendation, has suggested that national governments should refer their budgets to their peers before announcing them domestically. However, Mr McCreevy is adamant that such a proposal will never be agreed.

The next Budget would be set in the national context and the Government was in the best position to evaluate policies, he said.

"Over the past five years we have received no favours or special treatment. The Department of Finance clocks up hundreds of thousands of air miles dealing with very small issues and they have not been getting an easy ride for some time."