Belfast Telegraph

Tuesday 2 September 2014

Stick to savings plan, urges ECB

Tanaiste Eamon Gilmore has claimed the Government should do 'no more than is necessary' in terms of austerity

The Government has been given a firm warning from Europe to stick to its plans to make 3.1 billion euro (£2.6 billion) of savings in the budget.

As senior ministers debate whether the state can afford to make a less severe adjustment next month, European Central Bank (ECB) executive board member Jorg Asmussen said revising it down would be risky.

"Delaying fiscal adjustment is a risky strategy and the achievements so far should not be put at risk," Mr Asmussen said.

"So I would conclude that it is crucial that the authorities stick to the programme's objectives as they have done in order to ensure that the country remains on a sustainable path."

The Government's 3.1 billion euro target has been much-disputed, with junior coalition partner Labour calling for a lower figure.

Party leader and Tanaiste Eamon Gilmore has claimed the Government should do "no more than is necessary" on October 15.

Ireland hopes to reduce its deficit to 5.1% of GDP in 2014, and to get it down further to 3% by 2015.

The Labour leader has insisted Ireland can meet that target without a 3.1 billion euro adjustment, but Fine Gael is yet to be drawn on a figure.

Taoiseach Enda Kenny and his Fine Gael colleague Finance Minister Michael Noonan have insisted no amount can be agreed on until the Government has more data on the state's financial position.

Mr Asmussen, the German representative on the ECB executive board, told RTE Radio that Ireland's debt is still fairly high and that continued austerity would be necessary to keep the country on track.

This follows claims from the Taoiseach at an Irish Business and Employers Confederation event on Friday when he vowed not to increase the country's income tax rate in the next wave of spending cuts and tax hikes.

Mr Kenny also insisted that Ireland's relatively low corporation tax rate of 12.5% would remain untouched, saying it was a cornerstone of policy.

He said the Government is committed to getting the public finances in order and exiting the controversial bailout programme at the end of the year.

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