Kenny 'cannot force' France to accept interest rate cut

 

Taoiseach Enda Kenny has said he cannot force France to accept a cut in Ireland's bailout interest rate.

Speaking to reporters in Dublin today, Mr Kenny said he would arrange a meeting with French president Nicolas Sarkozy if that was appropriate.

“What do you want me to do, ring up the Élysée and say I'm here I need to speak to you?...I cannot force another country to give agreement,” he said.

Although Mr Sarkozy wants Mr Kenny to increase Ireland’s 12.5 per cent corporate tax rate in return for a one percentage point reduction in the interest charge, the Taoiseach refuses to budge.

Mr Kenny said he intended to participate fully in discussions at the European Council meeting in Brussels tomorrow, adding that it might be appropriate to raise the interest rate issue there.

Responsibility had been devolved to ministers for finance to negotiate and conclude the question of the agreeing the principle of reducing interest rates. Some progress had been made, he added.

“If the situation arises that it’s appropriate to have a meeting with President Sarkozy about this particular matter I would be happy to do so, but for now I’m pleased that the Minister for Finance on our behalf, in co-ordination with his other colleagues, is continuing the discussions that they were mandated to conduct.”

Earlier in the Dáil, Mr Kenny faced questioning from the Opposition about why he had not spoken to Mr Sarkozy about the interest rate.

Fianna Fáil leader Micheál Martin said he found it astounding that the pair had not had a bilateral meeting.

European Commission chief José Manuel Barroso yesterday played down the prospect of a deal to cut the cost of Ireland’s bailout, saying the matter is not up for discussion when EU leaders gather tomorrow.

Meanwhile, Irish and Portuguese bonds fell amid speculation Greek prime minister George Papandreou's confidence-vote victory last night does not signal an end to the euro zone's sovereign debt crisis.

Ireland's two- and 10-year yields rose to all-time highs, while Portugal's two- and 10-year yields reached records. Attention now turns to whether Mr Papandreou can push through parliamentary approval next week of a €78 billion package of budget cuts to stave off the threat of default. German bunds rose as investors sought the euro area's safest assets.

"The market is still wary, despite the Greek confidence vote," said Eric Wand, a fixed-income strategist at Lloyds Bank Corporate Markets in London. "The austerity measures may have a much rougher ride getting through parliament. The market is a bit concerned that the situation hasn't greatly changed, and the periphery is still vulnerable."

European finance ministers said this week that they would withhold approval of a €12 billion payment to Athens until passage of the plans to cut the deficit, sell state assets and impose a "crisis levy" on wages.

Additional reporting: Reuters