We have come a long way from the financial crash. Back then, the first two bail-out countries – Ireland and Greece – were in the spotlight as their public finances ran into problems, leading to much finger-wagging from Brussels and other EU capitals.
Now in its assessment of draft member state budgets for 2024, the European Commission gave the two former budgetary miscreants a clean bill of health, while firing a few shots at the bigger member states, notably Germany and Italy.
For Ireland, budget ministers Michael McGrath and Paschal Donohoe aiming for a surplus next year went a long way to meeting the requirements. France, on the other hand, has a budget deficit target of 4.4 per cent next year and so gets chided for increasing spending by too much, even if the rate of increase is less than Ireland’s. Italy also got rapped on the knuckles on its spending plans.
The news may not win many votes for the two ministers in Carrigaline or Cabra, but it is nonetheless welcome at a time when interest rates are rising and bond investors are again looking at the prospects of individual countries.
An interesting aspect of the commission’s decision was its assessment on energy supports, which it judged to be winding down here – as it has asked to happen across the EU. Ireland has continued supports into 2024 – two of the three €150 household credits announced in the budget will be paid next year. But the commission points out that, on current plans, the cost of them is falling and, as things stand, once-off supports will be fully phased out by 2025.
This highlights an interesting dilemma for the next budget. By that time household energy bills will probably have fallen significantly further but will remain above historic norms. So does the Government extend the supports again in some form, or discontinue them?
Assuming a general election has not already been held by then, the views of voters and the state of the public finances are likely to be much more influential here than what they will think in Brussels.