Wednesday 26 July 2017

EU treaty won't mean years of cutbacks, says Kenny

Michael Brennan Deputy Political Editor

TAOISEACH Enda Kenny said yesterday that taxpayers will not face years of endless Budget cutbacks under the new EU fiscal treaty.

There have been concerns that the strict deficit rules in the new agreement will force Ireland to introduce even more Budget cutbacks to reduce the national debt of €119bn.

But Mr Kenny said yesterday that he believed that economic growth would have a "big impact" in this area -- meaning that the State's finances would improve and the potential requirement under the treaty to introduce even tougher Budget cutbacks would lessen.

"Ireland signing up to this is not consigning itself to a programme of austerity for the future," he said.

The EU fiscal treaty agreed by 25 out of 27 EU members in Brussels last week is one of the biggest political challenges facing the Government in the coming months.

If signed into Irish law, the State will have to commit to having a "balanced budget" -- at a time when it is already running an annual deficit of up to €18bn. And the Government will have to bring in legislation for a "debt brake" -- making it the law to take corrective action if borrowing exceeds a certain amount.

Mr Kenny said the rules of the treaty would not apply until the current IMF/EU bailout ended in 2013. And he said that, even then, any additional Budget cutbacks required would have to be decided by the European Commission "depending on circumstances, with each country".

"They are matters of a very complex, technical nature but it's not a one size fits all," he told RTE's 'This Week'.

Fianna Fail leader Micheal Martin has written to Mr Kenny asking for more clarification about the impact of the treaty on the State's economic sovereignty.

The treaty is currently being examined by Attorney General Maire Whelan to see if a referendum is necessary before it can be signed into Irish law.

Demanding

Sinn Fein, which is demanding a referendum regardless of her verdict, could not be contacted yesterday -- but the party was highlighting the view of Nobel prize winning economist Joseph Stiglitz who said that for world governments to choose austerity was to "bet it all on the confidence fairy" appearing. He said consumers usually cut back on their spending as a result of more austerity "worsening the downward spiral".

But Mr Kenny said yesterday that the country was still spending €16bn to €18bn more than it was taking in.

"We simply have to sort out our own problem here," he said.

trail of broken promises, page 23

Irish Independent

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