€15bn target is 'negotiable' - Rehn

 

European commissioner for economic and monetary affairs Olli Rehn has been holding talks with Opposition finance spokespersons in Dublin today.

Mr Rehn held separate meetings with representatives of Fine Gael, Labour and Sinn Féin at the European Commission office in Dublin.

A Sinn Féin delegation was the first to meet Mr Rehn, followed by Fine Gael’s economic delegation headed by Michael Noonan and a Labour Party group led by Joan Burton.

Fine Gael’s Michael Noonan reported that the commissioner said the country's targeted €15 billion budget deficit cuts over four years is negotiable, depending on how economic growth performs.

“Significantly, Mr Rehn has agreed with Fine Gael that the Government’s own €15 billion figure for the four year adjustment could change. And he stated that the scale of the fiscal adjustment would be reviewed every year," he said.

Mr Noonan said he told Mr Rehn that a new Government with a clear electoral mandate and a stable majority would "offer far greater stability and certainty to the financial markets".

“Mr Rehn supported Fine Gael’s view that if the next Government can promote faster economic growth, it will require fewer spending cuts and tax increases in future budgets," he said.

Labour’s finance spokeswoman Joan Burton said Mr Rehn told her he believes Ireland's budget deficit-cutting measures are "credible."

Ms Burton supports the target of cutting the budget deficit to 3 per cent of GDP by 2014. However, she repeated her party's view that the proposed adjustments of €6 billion in the forthcoming budget were too deep.

“We made it clear to the commissioner that an economic strategy that’s only about cutting and deflation is likely to be the red queen’s race. A race to standstill,” she said.

“The budgetary targets set out by the Minister for Finance last week are unlikely to be achieved except with severe deflation. Severe deflation in an Irish context with no provision for growth and jobs and employment and investment is just running to standstill,” she said. “We have a difficult budgetary deficit that we have to address but the undermining of Ireland arises from the banking crisis.”

Ms Burton told Mr Rehn that what people in Ireland wanted was some accountability for what had gone wrong in the Irish economy. She said that required a general election.

Speaking after the meeting, Sinn Féin's Caoimhghín Ó Caoláin said he told the commissioner Ireland's budget target is "completely unrealistic and unachievable"

He added: “I and my colleagues Arthur Morgan and Mary Lou McDonald this morning informed the European Commissioner Ollie Rehn that Sinn Féin will not be part of any consensus that seeks to cut €6 billion from the economy next year hitting low earners and vital public services hardest."

The commissioner also met members of the Green Party this morning. After the meeting, Senator Dan Boyle tweeted that he was certain Mr Rehn is “operating in the country's best interests and is confident we can work through crisis”.

Mr Rehn also met Prof Patrick Honohan, the governor of the Central Bank and delegations from Ibec and Ictu. This afternoon, he delivered a lecture at the Institute of International and European Affairs, before returning to Brussels.

Yesterday, Mr Rehn backed the Government’s four-year budgetary strategy and called for a political consensus in support of it.

Speaking at a press conference after a two-hour meeting with Minister for Finance Brian Lenihan in Dublin last night, Mr Rehn said it was always to the benefit of a country in a difficult situation if a cross-party consensus could be found.

“In the current political situation in Ireland, irrespective of party political differences . . . it would be of great benefit for Ireland if broad political support for the necessary corrective measures of structural reform could emerge.”

Mr Rehn said he wanted to endorse the Government’s four-year plan involving an adjustment of €15 billion and its decision to frontload an adjustment of €6 billion in the December budget.

“Ireland has been a low-tax country,” he said, but now it was time to lean towards becoming a “normal tax country” in the European context. But he would not be drawn as to whether he was including corporation tax in this.

He said his discussions with Mr Lenihan had been “substantial and frank” and the message from the European Commission was that it supported Ireland and its citizens as they faced into the challenges ahead.