Government concerned on proposed EU fiscal integration

State supportive of banking and capital markets unions but wary of losing authority

Minister for Finance Paschal Donohoe will attend an Ecofin council meeting later this week where the EU’s economic future will be discussed. Photograph: Gareth Chaney Collins

Minister for Finance Paschal Donohoe will attend an Ecofin council meeting later this week where the EU’s economic future will be discussed. Photograph: Gareth Chaney Collins

 

The Government has expressed concern at long-term proposals by the European Commission to deepen the European monetary union with closer co-operation between states on budgetary and fiscal matters, and set its face firmly against any changes in voting procedures for taxation matters at EU level.

In a blunt statement issued on Wednesday night, the Government said: “The Irish Government would not favour any change to existing EU voting rights on corporation tax.”

The proposals for deepening the Economic and Monetary Union (EMU), contained in a paper on the future of Europe, were discussed by the Cabinet at its meeting on Wednesday, after a briefing by the Minister for Foreign Affairs Simon Coveney.

The commission has published a number of papers on how the EU should respond to Brexit, including one on deepening the Economic and Monetary union.

A spokesman said that the Government was supportive of measures proposed by the commission in the period up to 2019 on completing banking union and capital markets union.

However, Ministers concluded that the proposals for the post-2019 period, some of which involve a significant deepening of economic union and therefore the loss of power of national governments, are “sketchy” and “need more detail”.

Ideas floated by the commission include eurobonds – common debt issuance by the euro-zone countries – a common euro area treasury and a common euro-zone budget.

Implementation of any or all of these proposals would involve a significant loss of national economic sovereignty and its pooling with other euro-zone countries. Other ideas in the commission paper include a euro-area stabilisation fund, which member states could draw transfers from during economic shocks, and a euro-zone assistance scheme for periods of sudden high unemployment.

The paper acknowledges that such measures could involve “the creation of a euro-area fiscal capacity”, which would require significant political movement on behalf of member states.

Ambitious moves

Such political assent is unlikely to be forthcoming from the Government, though. While Dublin is happy with some of the commission proposals, and says it will examine any proposals with an open mind, senior Government figures say some of the more ambitious moves are unlikely to become reality.

In a statement issued on Wednesday night, the Government said: “We are supportive of the measures proposed for the short-term actions phase up to 2019, which includes the completion of the banking union and delivering capital markets union.

“However, the general proposals set out in the second phase (post-2019) need further careful consideration and analysis to avoid any potential unintended effects. This was referenced today by [Jean-Claude] Juncker in his state of the union address.”

Overall, it said, Ireland would adopt a “generally positive tone to this phase and examine the proposals as they emerge. Ireland believes that the capacities of the current framework should be fully utilised before further institutional change is even considered.”

The Minister for Finance Paschal Donohoe will attend the informal Ecofin council meeting later this week where these issues will be discussed.