EU backs plan for €3bn budget cuts
The European Union has waved through the Government's planned €3bn in budget cuts for next year, saying Ireland is on track to slash its deficit by a 2014 deadline.
The move came as Spain and Portugal were asked to make extra savings beyond those announced last month to fight off market speculation that they could be next in line for a Greek-style bailout.
All EU states are being told to start reducing expenditure by next year at the latest, but most are having to begin earlier.
Ireland is one of 24 countries under increased scrutiny for breaking the bloc's deficit limit, which says shortfalls should not measure more than 3pc of total annual output.
The budget had a shortfall of €23bn in 2009, a gap equal to 14.3pc of gross domestic product, almost five times the EU limit. A Commission report published yesterday warned the Government to keep borrowing in check and overhaul the pensions system "as soon as possible" to make sure it can support a rapidly ageing population.
The regular review also asked the Department of Finance to spell out the savings it intends to make next year.
"Ireland is on track, and it's essential Ireland will indeed implement the planned measures and ensure the targets will be substantiated with these concrete measures to follow on this path of adjustment," the EU's economics chief Olli Rehn said yesterday.
In an April report Ireland was told that extra capital injections to the banking sector and worse-than-expected economic growth could put the projected savings in jeopardy.
The Commission is soon to come out with a plan to keep closer tabs on budgets before they are approved by national parliaments.