Rehn endorses Irish economic strategy

EU Commissioner Olli Rehn has said Ireland has implemented a significant package of consolidation in 2010 and that the country…

EU Commissioner Olli Rehn has said Ireland has implemented a significant package of consolidation in 2010 and that the country is "on track."

Speaking in Strasbourg, the Economic and Monetary Affairs Commissioner Olli Rehn said that effective action was taken by twelve member states, including Ireland, in excessive deficit procedure.

"The Irish authorities have implemented a significant consolidation package for 2010 of 2.5 per cent of GDP, mainly on the expenditure side, in order to achieve the 11.5 per cent of GDP deficit target. Overall, the net deficit-reducing thrust for 2010 is estimated at 4 per cent of GDP, including the full-year effect of measures taken in the course of 2009."

The European Commission assessed the action taken by Ireland, Belgium, the Czech Republic, Germany, Spain, France, Italy, the Netherlands, Austria, Portugal, Slovenia and Slovakia in response to the Council recommendations of 2 December 2009 relating to the correction of their respective excessive government deficits. The Commission concluded that the authorities have acted in accordance with the recommendations.

"The current economic circumstances call for a coordinated fiscal exit strategy in order to face both the necessity of a decisive fiscal consolidation and the need to sustain the nascent economic recovery. The current budgetary targets, including the revised targets of Spain and Portugal, appear to ensure an appropriate overall fiscal stance for the EU, but there is an evident need to advance more forcefully on the structural agenda. The need to coordinate better and more effectively reinforces our call for reinforced economic governance in Europe," said Mr Rehn.

The Excessive Deficit Procedures deadlines and fiscal efforts for the member states concerned were fixed in accordance with the fiscal exit strategy principles as agreed by the European Council in October.

In line with the pact, the council fixed a review clause to assess whether first progress were made towards consolidation on June 2nd.

France, Ireland and Spain were put in EDP in April 2009 on the basis of a breach of the 3 per cent threshold in 2008. France and Spain were given up to 2012 to correct their excessive deficit, while the Irish deadline was fixed to 2013.

After six months, the deadlines for these countries were postponed by 1 year as adverse economic conditions made them impossible to be reached. Thus, France and Spain were recommended to correct by 2013 and Ireland by 2014 implying annual average efforts ranging from 1 per cent to 2 per cent of GDP.

"In all cases we conclude that the measures taken were sufficient to achieve the 2010 targets and, in most cases, there is an invitation to specify as soon as possible measures to substantiate the targets for the years beyond 2010" the Commission said today.