Taoiseach pushes for greater budget flexibility from Europe

Taoiseach Enda Kenny has raised the prospect of further tax cuts in October's budget as Ireland continues its bid to secure more flexibility from the European Commission on the interpretation of fiscal rules.

Speaking at the end of the second day of an EU summit at which the EU's economic rules were discussed, Mr Kenny said that Irish officials were working with the European Commission to find ways of interpreting EU budget rules that would reflect the real economic profile of the country.

“You don’t want an interpretation of the rule that doesn’t reflect the growing economic strength of the country,” he said, adding that he had outlined Ireland’s strong economic performance to EU leaders during Friday morning’s session.

Referring to October’s budget, he said: “Hopefully we can continue to reduce the taxation burden that so people next year will continue to see another modest increase in their take-home pay...We accept the rules of the European Commission, but the fact that we’re in a very different position than we were four years ago, how best can we interpret the rules with the Commission.”

Minister for Finance Michael Noonan last week pressed for more flexibility for countries such as Ireland in the interpretation of EU budget rules during a Eurogroup meeting in Brussels, following the European Commission's decision to grant France two more years to reach its deficit targets.

In particular, the Government is disputing the economic growth and data projections being used by the European Commission in calculating Ireland’s debt and deficit targets.

The need for member states to proceed with structural reforms was emphasised by ECB president Mario Draghi at Friday's closed-door meeting, as the head of the European Central Bank noted that Europe's recent strong performance mainly reflected external factors such as low interest rates and oil prices and the depreciating euro.

With Greece continuing to preoccupy minds in Brussels, Ireland's strong economic performance and experience of substituting proposed troika measures with its own alternatives during the Irish bailout was cited a number of times during the summit, Mr Kenny said, with German chancellor Angela Merkel among those doing so.

Dr Merkel also highlighted Ireland’s troika experience in her post-summit press conference, as she outlined how Greece could take “ownership” of political reforms as negotiations continue between Athens and its international lenders.

Mr Kenny said he had also spoken to Greek prime minister Alexis Tsipras on the fringes of the summit on Friday morning, outlining Ireland's strategy of substituting bailout measures with its own reforms.

“Where a proposal was put on the table by the Troika, in some cases Ireland made a different proposition. The outstanding example was the reduction of Vat from 13.5 per cent. That was paid for by the imposition of pension levy, but that stabilised the industry, and created 30,000 new jobs, “ the Taoiseach said.

“I mentioned to the Greek prime minister, Mr Tsipras, that within the framework that now exists, Greece is getting time and space to make its own recommendations about what’s best in its interests within that framework.”

Mr Kenny was among those who strongly criticised the strategy of the Greek government on Thursday.

"There's a difference between political argument and disagreement and threats of releasing jihadists and terrorists in Europe. That's not acceptable," Mr Kenny said, referring to recent comments by the Greek foreign and defence ministers.

Greece agreed last night to submit a fresh list of reforms “within days” to lenders, as the impasse between Athens and creditors continued amid signs that the Greek government could face a possible cash crunch by early April.

Mr Tspiras held more than three hours of talks with Dr Merkel, French president Francois Hollande and senior EU figures following the first day of the EU leaders' summit in Brussels.

Speaking after the meeting, Dr Merkel said it had been “good and constructive” but warned that the government will have to meet commitments before it can access EU money. The Greek prime minister travels to Berlin for talks with the German Chancellor on Monday.

EU figures emphasised that the agreement of February 20th reached between Greece and the euro group of finance minister still stood. A joint statement issued by European Council President Donald Tusk, European Commission chief Jean-Claude Juncker and Eurogroup president Jeroen Dijsselbloem after the meeting, said that the Eurogroup ready to reconvene "as soon as possible."

“Within the framework of the Eurogroup agreement of 20 February 2015, the Greek authorities will have the ownership of the reforms and will present a full list of specific reforms in the next days,” the statement said.

Mr Hollande said there “was no time to lose” for Greece to come forward with reforms.