Hi °C | Lo °C The Government will have the safety net of extending the time period for reducing the gap between its income and spending – but only if the economy goes into another unexpected dive.
However, the Coalition is insisting it won't need to roll out the timetable for reducing the deficit by an extra year, as it is on target.
The concession of adding an extra year to the deficit reduction is outlined in a letter to EU finance ministers, including Finance Minister Michael Noonan, from European Commissioner Olli Rehn.
Mr Rehn paints a mildly optimistic picture on the European economy for the second half of the year.
He says economic growth will gradually increase in the latter six months of the year, but this will take some time to trickle down to businesses and consumers.
However, he also says there is now growing confidence about the EU economy and the markets are starting to respond to the measures taken to stabilise countries.
The powerful EU Commissioner also leaves the door open for countries to extend the period for reaching their deficit target – if economic growth rates fail to match expectation.
But this extension will only be granted if countries are already meeting their targets.
Last year, Greece, Portugal and Spain were given an extra year to meet the 3pc borrowing target.
The Government was granted an extension to the end of 2015 by the European Commission after coming to office two years ago.
Last night, the Department of Finance said it did not envisage needing to ask for another extension of time.
"We are targeting 2015 and trying to get below 3pc by 2015. Our excessive deficit procedure is set out," a spokesman said.
Irish Independent
