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The European Commission has opened an excessive deficit procedure against the Irish Government for allowing its budget deficit to spiral out of control.

Today EU Economy and Monetary Affairs Commissioner Joaquin Almunia triggered the procedure against Ireland because its budget deficit is expected to hit 5.5 per cent this year and 6.5 per cent in 2009.

Under the EU stability and growth pact EU states are required to keep their budget deficit to GDP ratio below a 3 per cent limit and maintain a debt/GDP ratio below 60 per cent.

The pact allows for a government to be fined if it fails to bring its deficit below the 3 per cent ceiling over three or four years, although this is regarded as more of a theoretically possibility. In practice it has never happened.

Now that the excessive deficit procedure has been initiated the Commission is expected to propose a number of measures that the Government could implement to bring the deficit under control.

In an interview in The Irish Timeslast Friday Mr Almunia said a deficit of 5.5 per cent was excessive and no where near the reference value of 3 per cent “so we cannot use the exceptional circumstances clause”.

“The stability and growth pact is not about fines. It is not about blaming member states for the sake of blame," he said.

“In some cases it is about peer pressure, trying to use the European dimension and multilateral surveillance to push governments to adopt the adequate responses. . . It also supports governments to implement policies, which in some cases are not very popular.”