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Ireland ready to pay more into EU budget as crunch talks loom

European Commission facing opposition from states including Germany on request for extra €66bn for long-term budget

Minister for Finance Michael McGrath said Ireland is willing to pay more into the EU budget. Photograph: Simon Wohlfahrt/Bloomberg

Naomi O’Leary
Thu Dec 7 2023 - 15:50

Ireland is willing to pay extra into the European Union budget to ensure a wide range of services can continue, Minister for Finance Michael McGrath has said in advance of crunch negotiations on the issue in Brussels.

The European Commission asked for an extra €66 billion to be added to the EU’s long-term budget, a proposal that drew stiff blowback from frugal member states including Germany.

Intense talks are taking place in Brussels in advance of the year’s final summit of EU leaders next week, and there is uncertainty over whether the impasse can be broken. The latest compromise proposal has suggested cutting back investment in strategic technologies, part of research programme Horizon Europe, and the commission’s administration expenses, while redeploying unused Brexit supports, cohesion and pandemic funds.

On arrival to meetings of finance ministers in Brussels, Mr McGrath threw the Republic’s weight behind approving at least some of the additional funding requested.

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“There may well be a requirement to put in additional money to ensure that we can continue to provide all of the services across the different budget lines, so Ireland is willing to make an additional contribution,” Mr McGrath said.

“But first and foremost, we need to see the flexibility in terms of adapting the existing budget,” he added.

The reference to flexibility refers to the idea of moving funds that have been unused so far in the budget to be reassigned to other areas, something proposed by several member states as a preferable solution to increasing payments.

Some member states have resisted that, fearing they could miss out if cohesion funding or Common Agricultural Policy payments are reallocated.

The commission has said that €50 billion is required to help Ukraine stay afloat from 2024-2027, which would be given in a mix of grants and loans.

In addition, it has asked for €15 billion to manage migration into the EU and strengthen its borders, as well as top-ups to various research and investment programmes to advance the union’s edge in critical technologies.

Ahead of next week’s summit, Hungarian leader Viktor Orban has threatened to veto EU aid for Ukraine as well as a decision to open negotiations on joining the EU.

Mr McGrath said Ireland supported both approving the funding for Ukraine and signing off on the “next step” of its EU accession process.

“It’s really important that we provide the certainty that is needed about the continued supply of funding to Ukraine, so Ireland will be strongly advocating that agreement is reached to ensure that we can give that certainty,” McGrath said.

He also expressed hope that an agreement can be reached on fraught and lengthy negotiations on how to reform the EU’s debt rules, which are viewed as having broken down as they have long been ignored by many member states.

Talks are continuing to try to broker a compromise on a highly sensitive issue which divides more frugal countries that insist rules should be stricter and bind member states into cutting spending if they have excessive debt, and countries that believe investment is needed to create the conditions for economic growth.

Ireland’s most recent budget once again broke a rule that spending should not grow by more than 5 per cent per year, which has been violated since it was adopted in 2021.

The reform of the EU’s fiscal rules will not bind Ireland to be more prudent in spending in the short term, Mr McGrath said.

“Ireland is in quite a healthy position overall, given we are running budget surpluses, we have a low national debt relative to our GDP,” he said. “Ireland won’t be directly impacted, certainly in the short to medium term, by these rules.”

Naomi O’Leary

Naomi O’Leary

Naomi O’Leary is Europe Correspondent of The Irish Times

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