Business Irish

Tuesday 24 October 2017

EU wrong on Irish spending overrun claim, Noonan insists

Finance minister Michael Noonan. Photo: Tom Burke
Finance minister Michael Noonan. Photo: Tom Burke

Sarah Collins in Brussels

European Commission claims that Ireland will miss budget targets this year are wrong, Michael Noonan said yesterday. The Government will make a formal appeal to Brussels over the issue, he said.

The Minister for Finance said the Commission was "mistaken" when it warned Ireland it would miss an interim budget target this year.

"We will have our input now with the Commission and we will point out where we believe they are mistaken, as we think they are about 2016," Mr Noonan said in Brussels yesterday.

Last week the Commission said that the Government would miss a "structural" deficit target for 2016 by 0.1pc of GDP, blaming health overspending and tax cuts.

Although Ireland's overall budget deficit complies with European Union rules - it was 2.3pc of GDP last year, below the EU's 3pc limit - the Government is still obliged to aim for a broadly balanced budget in "structural" terms (which excludes exceptional items such as bank bailouts and other one-offs).

On that score, Ireland is not doing enough, the Commission said in its annual economic recommendations last week.

It wants the Government to take "further measures" to compensate.

However, the Commission and the Government have differing interpretations of how to measure our economy, given the large share of foreign multinationals here.

"There are some differences of opinion and there are some issues on which we believe the Commission is mistaken, and we will pursue those with a view to ironing out those difficulties," Mr Noonan said.

Ireland is entitled to respond to the Commission's recommendations, which will be discussed and signed off by all EU finance ministers over the summer.

Mr Noonan was in the Belgian capital for a meeting of Eurozone finance ministers about Greece.

Athens is seeking a further aid payment from its €86bn bailout programme and concessions to reduce a debt burden the International Monetary Fund warns could rise to 250pc of GDP by 2060.

The IMF says Greece needs a debt write-off to make the process viable, something other European states have ruled out.

Michael Noonan is also due to hold talks with fellow EU finance ministers on draft rules to combat corporate tax avoidance, that were tabled by the European Commission in January.

Ireland wants more time to discuss the proposals, particularly any move to change the way dividends, patents and income from subsidiaries outside the EU are taxed.

At least nine other countries - the UK, Belgium, Luxembourg, Cyprus, Malta, Hungary, Estonia, Latvia and Lithuania - also have concerns about the proposals.

"Ireland's position is that we agree with the initiative and we agree with the general approach, but we have some questions to raise and we hope our concerns will be met," Mr Noonan said.

He said many countries have difficulties with aspects of the plan, which requires unanimity to come into force.

Irish Independent

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