Tuesday 23 January 2018

Don't treat prom note deal as 'windfall' – Rehn

EU economic commissioner Ollie Rehn. Photo: Getty Images
EU economic commissioner Ollie Rehn. Photo: Getty Images
Peter Flanagan

Peter Flanagan

IRELAND should not treat its savings from the promissory note deal as a "windfall" and must stay focused on austerity, the EU's economic commissioner said.

Ollie Rehn said he was "surprised" at suggestions that the promissory note deal, which is worth around €1bn a year in savings to the economy, could be used to ease the conditions in future budgets.

"I have heard this has been described in some discussions as windfall gains. I'm a bit surprised by that," he said.

"In Ireland the level of public debt is high, as is the fiscal deficit and this means debt service is very high for Irish citizens.

"It's very important to stick to the fiscal targets and ensure the debt burden can be reduced in due course. A high level of depth tends to have a negative impact on growth (so that must be deal with)," he said.

Mr Rehn's comments came as he arrived in Dublin for a conference on promoting growth in Europe.

At the event in Dublin Castle, Mr Rehn warned that while great progress had been made in bringing the euro back to financial stability, there was still much more to be done if the European economies were to be put on a "sustainable" path for the future.

"Some member states are still facing large adjustment challenges despite the significant progress made.

"The rebalancing process after the credit-fuelled boom has progressed, but we should be clear that it will continue to weigh considerably on growth and public finances for some time to come, especially in some countries.

"The work (to stabilise the single currency) is not finished yet, we have great challenges ahead of us.

"The debate on the future of the European Monetary Union cannot be limited to institutional issues but we must focus on growth, job creation and competitiveness of European industry at least with the same vigour and energy," he said.

Mr Rehn's call for European countries to boost austerity were countered by UCD economist Karl Whelan, who argued at the same event that governments should focus more on stimulating growth than just fiscal retrenchment.

Irish Independent

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