Friday

23rd Jun 2017

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 extends sanctions on Russia

German chancellor Angela Merkel said that Russia hadn't done enough to implement the so-called Minsk peace process, a condition for lifting the sanctions.

Focus

UK's universities set 'Brexit wish list'

British academics want to guarantee residency and work rights for their EU staff, as well as "enhanced mobility opportunities" for UK and EU students, mostly by keeping British participation in EU funding programs.

News in Brief

  1. Juncker has 'no' clear idea of kind of Brexit UK wants
  2. Belgian PM calls May's proposal on EU citizens 'vague'
  3. UK lacks support of EU countries in UN vote
  4. Spain to command anti-smuggler Mediterranean force
  5. Estonia confirms opposition to Nord Stream 2 pipeline
  6. Ireland and Denmark outside EU military plan
  7. EU leaders renew vows to uphold Paris climate deal
  8. US issues warrant for VW managers, German media say

Stakeholders' Highlights

  1. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  2. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  3. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  4. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  5. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  6. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  7. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million
  8. EUSEW17Bringing Buildings Into the Circular Economy. Discuss at EU Sustainable Energy Week
  9. European Healthy Lifestyle AllianceCan an Ideal Body Weight Lead to Premature Death?
  10. Malta EU 2017End of Roaming Charges: What Does It Entail?
  11. World VisionWorld Refugee Day, a Dark Reminder of the Reality of Children on the Move
  12. European Social Services ConferenceDriving innovation in the social sector – 26-28 June