Noonan stands by No vote warning

Minister for Finance Michael Noonan today stood by his statement yesterday that rejection of the fiscal treaty in the forthcoming referendum would mean a much tougher budget next year.

Speaking to reporters in Brussels today, Mr Noonan said the “uncertainty” caused by a No vote would see the Government’s current conomic growth forecast for next year come down.

In planning for budgets over the next two years in an absence of growth, "any minister for finance will have to be looking at more austere measures," he said after a meeting of European Union finance ministers at the European Council headquarters.

“If there is a No vote it will create uncertainty. It will create a lack of confidence in the economy and it will have an effect on investment decisions, both external and internal. Some will be deferred, others will be cancelled,” he said.

Without naming the companies in question, Mr Noonan said instability late last year had led some overseas firms to stall a couple of investment projects.

A No vote would oblige him to mark down his forecast for economic growth next year. “On next year’s profiles we’re looking at 2.2 per cent of growth in GDP. The uncertainty caused by a No vote will cause that to come down and consequently that would make my job more difficult in planning the next budget,” he said.

“If there no assured source of funding after 2013 and there won’t be because of the linkage of the European stability mechanism treaty with the treaty that’s up for decision on the 31st there’ll be a lot of advice that the prudent thing would be to speed up the progress of adjustment.

“And I think that we’d be getting that advice probably from the fiscal council, although they’re independent and will speak for themselves. We’ll certainly be getting that advice from the external authorities, so again that kind of advice in planning a budget would have to be taken into account.”

Meanwhile, Minister for Communications Pat Rabbitte has denied the Government is using scare tactics to push for a Yes vote in the fiscal treaty referendum.

Mr Rabbitte said Mr Noonan's comments on the consequences of a No vote were made to point out the uncertainty that would follow on from a rejection of the treaty.

“Nobody in Government is trying to scare anybody. This is a very important decision that has to be taken calmly and after proper public discussion,” Mr Rabbitte said. “I think Minister Noonan was merely pointing out the uncertainty that would follow on from a No vote, the difficulty that it would cause in terms of attracting investment here and the inevitable knock on consequences for the budget.”

Mr Rabbitte accused the No side of “playing with semantics” over whether Ireland could apply to the IMF for further funding in the event of a rejection.

“I think it’s very important that we don’t play with words on this one and I think it’s very important that we don’t mislead people," he told reporters in Dublin. "Of course you can apply to the IMF for a bailout. You can apply to your local bank manager as well for a loan but that doesn’t mean to say that you’re going to get it.”

Mr Rabbitte said the IMF cannot print money, does not control a currency, is not the ECB and would only help Ireland if this was done in conjunction with the ESM.