Tuesday

6th Dec 2016

EU urges Ireland to maintain austerity

  • Dublin: Ireland should not trigger new spending and tax cuts, the EU commission has warned (Photo: William Murphy)

The EU commission has warned that the Irish economy is still vulnerable, urging the government to stick to budget austerity.

The warning is contained in a report published on Monday (23 June) by the EU executive assessing Ireland's economic progress six months after it exited its €78 bilion bailout in December 2013.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"Ireland needs to continue with fiscal consolidation, reduce the private sector overhang, and further progress financial sector repair to safeguard and strengthen the momentum of the economic recovery," the paper says.

The report was based on findings from a four-day mission at the end of April.

Ireland was the first eurozone country to complete a bailout programme, and has been held up by the European Commission as an example of how to successfully implement an economic rescue.

"Irish authorities have so far consistently (over)delivered the recommended fiscal adjustment under the EU-IMF programme," the report notes.

Although Ireland's economy fell back by 0.3 percent in 2013, it is forecast to grow by 1.7 percent this year and 3 percent in 2015.

Meanwhile, unemployment, though high, has fallen from a crisis peak of 16 percent to 12 percent, and is forecast to fall to 10 percent next year.

It made a successful return to the financial markets, and sold €2.75 billion of 10 year bonds at a record low interest rate of 2.73 percent in May.

The Irish government also has cash reserves of around €21 billion which is expected to cover its financing needs for another two years.

With Ireland having had the repayment dates for its bailout loans pushed back until 2029, the report concludes that "repayment risks for the EFSM and EFSF loans are very low at present".

But despite being given a largely clean bill of health, the commission remains clear that there is no room for the centre-right led government to loosen the purse strings.

The Labour party, the junior coalition partner, is particularly anxious to move away from austerity policies following a disastrous performance in last month's European elections which saw the party lose all three of its seats and which prompted the resignation of Eamon Gilmore, the deputy prime minister and Labour leader.

For his part, finance minister Michael Noonan continues to resist demands by the EU executive to cut a further €2 billion from this year's budget, which the commission believes is needed to bring Ireland's deficit below 3 percent of GDP in 2015.

The commission warns against any tax or spending "giveaways" in the run to the next general election in 2016, noting that "the budgetary projections ... reveal no room for manoeuvre".

EU agrees on debt measures for Greece

Measures to reduce the cost of Greek debt will be implemented immediately, but eurozone finance ministers said more action will have to be taken for a new agreement on the bailout programme.

Stakeholders' Highlights

  1. European Jewish CongressEJC President Breathes Sigh of Relief Over Result of Austrian Presidential Election
  2. CESICongress Re-elects Klaus Heeger & Romain Wolff as Secretary General & President
  3. European Gaming & Betting AssociationAustrian Association for Betting and Gambling Joins EGBA
  4. ACCAWomen of Europe Awards: Celebrating the Women who are Building Europe
  5. European Heart NetworkWhat About our Kids? Protect Children From Unhealthy Food and Drink Marketing
  6. ECR GroupRestoring Trust and Confidence in the European Parliament
  7. UNICEFChild Rights Agencies Call on EU to put Refugee and Migrant Children First
  8. MIRAIA New Vision on Clean Tech: Balancing Energy Efficiency, Climate Change and Costs
  9. World VisionChildren Cannot Wait! 7 Priority Actions to Protect all Refugee and Migrant Children
  10. ANCI LazioRegio-Mob Project Delivers Analysis of Transport and Mobility in Rome
  11. SDG Watch EuropeCivil Society Disappointed by the Commission's Plans for Sustainable Development Goals
  12. PLATO15 Fully-Funded PhD Positions Open – The Post-Crisis Legitimacy of the EU (PLATO)

Latest News

  1. Brexit deal must be done by October 2018, says EU negotiator
  2. Rising to the challenge of 'European Angst'
  3. Polish firm sues EU Commission over Gazprom privileges
  4. ID and police checks await all who enter and leave the EU
  5. Italy's Renzi to stay on to pass budget
  6. Dutch anti-Ukraine vote spawns 'app democracy' party
  7. EU agrees on debt measures for Greece
  8. EU scrambles to finalise gun-control reforms