Monday 26 September 2016

EU and UK add to Kenny's fiscal woes

Published 24/11/2012 | 17:00

As if it did not have trouble enough, the Irish government faces the prospect of taking over the EU presidency in June with Europe having no agreed budget for its €150bn-a-year operations.

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As the Taoiseach ruefully observed, that would leave the Irish presidency lacking authority at a time of deep crisis. All will be well if his optimism about agreement proves correct. Should no agreement be reached by February, Brussels would technically run out of funds.

Such an outcome still seems unlikely. However, while the Budget negotiations every seven years are always fraught, this one is certainly the most difficult since Margaret Thatcher demanded "our money back". Once again, the UK is at the centre of the difficulties.

Generally, Ireland's main interest in the EU budget centres on agriculture, with €1.7bn of payments a year – as the vigil by farmers at the Department of Agriculture shows. There is also €600m in rural development grants. But the position of the UK presents a new, and alarming, threat to Irish interests.

With so many governments cutting back on their spending, the UK's demand that the EU should do likewise does not seem unreasonable. However, it is governments that decide what the EU should do and they regularly ask Brussels to do more, while being reluctant to provide extra resources.

The talks ended without much sign that agreement was near. One suggestion is an overall reduction of €50bn, with a politically attractive emphasis on spending. For Ireland, it is the details that matter, rather than the amount, since it is already agreed that farm spending will be frozen in real terms.

Britain has never been so shaky, with a referendum on the terms of membership, if not membership itself, likely in a few years. There is growing support in Britain for the idea of leaving the EU, and a growing feeling in Europe that perhaps it might not be a bad idea.

That would be a nightmare for Ireland. So far, the Budget talks have been encouraging in this regard. Mr Cameron has clearly learnt lessons from his disastrous solo veto at the summit last December. Yesterday, he talked about his success in building alliances. Britain will not split with Europe on this issue, but the danger remains.

Irish Independent

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