Coalition committed to strict fiscal oversight, says Day

Government fully behind European Semester, says EU’s top civil servant

Catherine Day says the commission will issue policy recommendations to the Government in June. Photograph: Alan Betson / The Irish Times

Catherine Day says the commission will issue policy recommendations to the Government in June. Photograph: Alan Betson / The Irish Times

Sat, Mar 29, 2014, 01:00

Catherine Day has been Europe’s top civil servant for almost nine years but she dismisses outright any suggestion that she may become a contender to be Ireland’s next EU commissioner.

Máire Geoghegan-Quinn’s mandate expires this summer, prompting ongoing speculation in political circles that Minister for the Environment Phil Hogan will soon be on his way to Brussels. Yet there are no certainties in this scene.

Ms Day grew up in Dublin and she is the most senior Irish figure in Brussels.

In 2009 her name featured among the contenders when then taoiseach Brian Cowen appointed Ms Geoghegan- Quinn to the commission in succession to Charlie McCreevy. So is Ms Day a candidate now? Would she allow her name go forward? And would she be interested at all?

Her answer is as firm as it is blunt. “No,” she says. “No.”

We are at Lansdowne Road, where she has been addressing a conference on the EU’s new fiscal rulebook intended to prevent a repeat of the crisis that threatened the euro.

Although the Government insisted Irish economic sovereignty was completely restored last December when it left the bailout, Ms Day told her audience that this did not mean Dublin now has “full control” over policymaking.

In the backdrop are sweeping new laws that tie all member states to much stricter fiscal policy oversight, a process known as the European Semester. In the new order, draft budgets go to Brussels before national approval.

Ms Day says the commission will issue policy recommendations to the Government in June. This is no small thing, even if it does not quite herald the return of troika inspections and intrusive policy diktats.

“They’re not as binding in the same way. Let’s say they’re politically binding, but if a country completely flouts them in the end there will be consequences,” she says.

Government’s hands tied
To the observation that the Government’s hands are tied to a considerable degree, she says this is necessarily so. “At the stage Ireland is at, we would not expect Ireland to say: ‘Rubbish to your recommendations, we’re not going to follow any of them’,” she says.

“It would not be good, and certainly would not be good for a post-programme country, to suddenly not be following the recommendations.”

She won’t disclose recommendations in advance, but the commission’s concerns centre on the debt level, non-performing bank loans and high unemployment. She also cites anxiety over the education sector, saying further investment is now required at third level and at vocational level.

Ms Day has already said the Department of Finance is committed to the semester, but is the Government’s commitment equal to its officials’?

“Yes,” she says promptly. “I think there is no doubt. I know that in the Cabinet these issues have been discussed several times: ‘How do we position ourselves in the semester? What does it mean for us?’ They really are factoring it in, and that is what we want governments to do.”

Two commission officials will be posted to Dublin to gather data on the economic scene and relay concerns from Brussels. “I think it will help because nobody reads our stuff,” she says. “If they go into people’s office or they have a little seminar they can get people interested.”

Debt debacle
Ms Day has been secretary general of the commission since November 2005. She has a seat of her own in the summit chamber whenever European leaders meet. She was there during the debt debacle tumult as wealthy countries reluctantly agreed to prop up the ailing economies of Greece, Ireland, Portugal, Spain and Cyprus.

“The euro zone wasn’t equipped when the crisis hit and we had to take the decisions we could take at the time,” she says.

“Nobody knew when all this started to happen how much would unravel, how far it would go, so it was difficult even to get the rest of the union to accept that there was a Greek problem and they would have to step in and they did that.

“Then the Irish bank guarantee really spooked everybody and so we were into a programme and had to deal with that as well.”

While the roots of the Irish crash are well recognised at home, the question arises as to whether there were any failings at the European level.

Ms Day says the euro was “without certain essentials” when launched, attributing that to a lack of political will. For instance, moves to supervise the Greek statistical agency were spurned by big member states. “I think as a commission that we should have shouted louder and we should have shouted earlier,” she says in a general sense.