The European Commission has signalled a sharp reduction in finance to Ireland from EU structural funds.
The reductions projected in the Commission's next round of structural funding will have a severe impact on regional development and social projects in the Border, Midlands and Western (BMW) region.
While the region is the biggest beneficiary of a €4 billion structural funds programme that ends in 2006, a senior Commission official said yesterday that the allocations to Ireland will be significantly lower in a new scheme to run from 2007 to 2013.
The development comes after net receipts of some €37 billion from the EU budget in the 30 years since Ireland joined the union in 1973.
The new structural fund scheme was agreed on Wednesday by the European Commission. While its value could reach €143 billion, the final package is subject to agreement by the EU governments, some of whom want to reduce the scope of the overall fund.
In the current package, the scheme will be worth some 1.14 per cent of the overall EU budget. But six states, led by Germany and France, want to reduce the allocation to 1 per cent of the budget. If agreed, this would rule out any further funding to the BMW region.
If the plan is not changed, the region will receive reduced funding. This is despite some fears that the Commission plan would rule out any further allocations to the BMW region.
The current plan would avoid an abrupt halt to the funding while facilitating the winding down of projects. A similar winding down is already in effect in respect of EU-funded projects in the Southern and Eastern regions of the State. These will come to an end in 2006.
At a briefing in Dublin yesterday, the head of the European Commission unit responsible for regional development funding in Ireland declined to speculate on likely allocations to Ireland in the new scheme.
However, Mr Manfred Beschel said the funding for Ireland "must be" significantly reduced. The final outcome would be subject to a political negotiation, he said.