Europe must be decisive on euro crisis, says Kenny

 

EUROPE HAS to respond “comprehensively and decisively’’ to the economic crisis, Taoiseach Enda Kenny told the Dáil. “Ireland will contribute to that,’’ he said.

Mr Kenny said there was no point in having a EU Council meeting tomorrow unless there was a decision, or set of decisions, on the European situation.

He said that Moody’s, a credit rating agency, had pointed out that Ireland was in a very different set of circumstances from other countries.

“Therefore if a council meeting is to be held on Friday, it must be one that will grasp the nettle and set out Europe’s response to the contagion which is clearly causing anxiety and concern. With Italy having a debt of €1.8 trillion, or 120 per cent of GDP, the situation is obviously a cause for serious concern.’’

Mr Kenny said if the council meeting went ahead he would participate strongly in it “on the basis of what we have been saying for the past number of months about the overall level of pricing, the need for flexibility and the opportunities that exist to ease Europe’s problem and, as a consequence, Ireland’s problem’’.

That still left Ireland with domestic difficulties in terms of the budget deficit and the preparation for the December budget.

Fianna Fáil leader Micheál Martin said the decision by Moody’s to cut Irish debt to “junk’’ status was very frustrating.

“While it may be understandable in the context of the speculation about a default in Greece, it flies in the face of unquestionable evidence of Ireland’s resolute actions and Europe’s support for Ireland.’’

He said he welcomed the strong and clear statements by the Department of Finance and the National Treasury Management Agency pointing out the failure of Moody’s to note the many positive fiscal and economic indicators.

Mr Martin said the spread of the bond market crisis to Spain and Italy was quite similar to what had happened in other countries, including Ireland. “That is down to an abject failure at European level to nail down a comprehensive policy.’’

Mr Kenny said the Government had continued to discuss the question of the interest rate reduction with its European colleagues. However, there was now a situation where Europe itself must respond to a European problem. He said that was reflected in Moody’s analysis and downgrading. “Moody’s problem is not with Ireland; it recognises that this is a European problem which must be responded to in a European sense.’’

Sinn Féin leader Gerry Adams accused the Government of misleading the Dáil on the debt issue.

“The crisis grows deeper and it is the people, not the Government, who are paying the price.’’

He said before the end of the year the Government would have paid €800 million to unguaranteed senior bondholders in Anglo Irish Bank.

Mr Kenny said the big decision about that large payment was not due until November, adding that Minister for Finance Michael Noonan had signalled that discussions would take place with the European Central Bank in early autumn on the matter.

Mr Adams said the Government should stop putting the people’s money into bad toxic banks. “Instead it should be put into public services, and the Government should stand up for Irish interests.’’

Mr Kenny said he was not sure what land Mr Adams was living in, and accused him of talking “patent nonsense’’.

The situation applying in every household in the State, in every small shop, in every business, was that if one was spending more than one was taking in, one would not continue in business for long.

Ireland had a deficit of €18 billion this year, said Mr Kenny.