Ireland poised for turnaround after sticking to plan -- Rehn
EU commissioner says determined approach to bailout measures will restore confidence and lead to recovery
The Irish economy is "on target" and in the process of turning around, according to EU Economic Affairs Commissioner Olli Rehn.
But Mr Rehn -- who yesterday slashed European Union growth forecasts for the remainder of the year -- sidestepped the issue as to whether Ireland needed to take more specific measures to accelerate its economic recovery.
Former ECB executive board member Juergen Stark last week called for more civil service wage cuts in Ireland to spur recovery.
Mr Rehn said bailed-out countries including Ireland, Greece and Portugal needed to simply stick rigidly to their recovery plans.
"Greece, Portugal and Ireland, and other countries facing significant market pressures, should stick to their fiscal targets and take additional consolidation measures if needed in order to restore and reinforce confidence," he said, adding that he did not believe Europe was headed for recession despite sharply lowering growth projections.
He said Ireland's economic growth for 2011 was expected to be "broadly in line" with projections of 0.5pc expansion this year and that export growth remained "robust".
"Fiscal performance has been on target for the first eight months of this year, with no real tax shortfalls or overruns in expenditure," he added.
Mr Rehn -- who halved the growth forecast for the eurozone for the current half of the year from 0.4pc to 0.2pc -- warned that risks to the growth outlook across the union were "tilted to the downside".
"The sovereign debt crisis has worsened, and the financial market turmoil is set to dampen the real economy," he said.
However, Mr Rehn said that the full-year economic growth outlook for the EU remained unchanged at 1.7pc and 1.6pc for the eurozone due to what had been better than expected performance in the first quarter.
"GDP growth is expected to remain subdued," he cautioned.
"What was expected in spring to be a soft patch is now likely to develop into a deeper and more protracted period of feeble growth."
He also said people should not write off Greece and its eurozone membership.
"One should not underestimate the political will and also the ability of the eurozone leaders to take the necessary decisions to safeguard financial stability in the eurozone and thus on their part work so that the problems in Greece will be overcome."
Mr Rehn also ruled out Europe-wide stimulus packages in an effort to kick-start the region's economies when it was put to him that measures taken to date to steer the bloc back to growth had failed.
"We have to contain developments in the financial markets and we have to restore confidence in the European economy and ... manage the sovereign debt crisis," he said, noting that still high public debt levels and stress in financial markets needed to remain the prime concern for now.