ECB board member says €3.1bn budget adjustment needed

A member of the European Central Bank’s executive board has urged the Government to pursue the €3.1 billion adjustment set out in the State’s bailout deal.

Speaking on RTE’s The Business, Jörg Asmussen said significant progress had been made in repairing the public finances and that delaying fiscal adjustment was in his view “a risky strategy”.

“The achievements so far should not be put at risk,” he said.

Fine Gael and Labour have so far been unable to agree on a headline adjustment figure for next month's budget.

Minister for Finance Michael Noonan is keen to follow the troika's guidance and introduce a package of tax increases and spending cuts leading to a €3.1 billion adjustment.

Labour is seeking an adjustment of closer to €2.5 billion, which it feels will be enough to reduce the State’s budget deficit to the 5.1 per cent being sought by the troika in 2014.

Mr Asmussen also told the programme it was unlikely that the European Stability Mechanism would be used to retroactively fund the bailout of Ireland’s banks.

Meanwhile, Nama chairman Frank Daly told the same programme that the debt agency would invest some €2 billion in the Irish property market by the end of 2016.

Mr Daly also said Nama was planning to buy a car park at The Square in Tallaght from South Dublin County Council with a view to further developing the commercial centre.