Claim €200m budget package needed ‘a guesstimate’ - Noonan

Minister for Finance supports Italian calls for greater flexibility in EU fiscal rules

Minister for Finance Michael Noonan has said a sugestion by Ibec that a budget adjustment of just €200 million would be sufficient to reach the State’s deficit target is a “guesstimate”. Photograph: Eric Luke/The Irish Times.

Minister for Finance Michael Noonan has said a sugestion by Ibec that a budget adjustment of just €200 million would be sufficient to reach the State’s deficit target is a “guesstimate”. Photograph: Eric Luke/The Irish Times.

Mon, Jul 7, 2014, 15:50

Minister for Finance Michael Noonan has said a sugestion by Ibec that a budget adjustment of just €200 million would be sufficient to reach the State’s deficit target is a “guesstimate”.

In its pre-budget submission, the business lobby group said Mr Noonan should introduce a net €200 million package of adjustments, just 10 per cent of the €2 billion figure that was at one stage the Government’s target.

It argued that such a move would achieve a deficit of 2.7 per cent of gross domestic product (GDP), well below the Government’s 2.9 per cent goal.

Mr Noonan said it was too early to say the scale of adjustment that would be necessary in the October budget. “At best Ibec’s figure is a guestimate, but certainly we won’t have to adjust by €2 billion,” he said.

Speaking in Brussels ahead of a euro zone finance ministers meeting, Mr Noonan reiterated that he had said, on a number of occasions since the publication of the stability programme in April, that the level of adjustment necessary to get the deficit below 3 per cent would be less than €2 billion.

However, he declined to say how much would be required.

Mr Noonan also welcomed Italy’s call for more flexibility in EU budget rules, a theme that is likely to permeate EU policy-making during Italy’s six month presidency of the Council of the European Union which began this week.

“I think that the set of fiscal rules which in effect amount to a fiscal union were designed and begun to be implemented in times of great crisis. Now that the euro zone has settled down I think the rules should be re-visited and a more precise interpretation of some of them be laid out,” the Minister said.

“If that means some flexibility in the interest of growth and jobs in Europe then that would be welcome. “

Mr Noonan also said he was “mystified” by a report from the Bundestag finance committee compiled following its visit to Ireland last month which criticised Ireland’s over-reliance on multi-nationals in its economic policy.

“They must have been at different meetings, whoever filed the report, as I had a very good meeting with them,” he said.

“We had a full and frank discussion about the Irish economy and indeed about the German economy, and most of the ground was common ground.”