New tension between FF and Greens

The Green Party leader was left looking foolish last night after the Department of Finance and EU Commissioner Olli Rehn swooped to deny his comments.

Mr Gormley made the controversial claim while attacking Fine Gael for suggesting that the wage does not have to be cut to €7.65.

He alleged that the opposition party was living in a fantasy land because the EU's "first demand" was the reduction.

Sources told the Herald that his comments had driven a further wedge into the tetchy relationship between the Greens and Fianna Fail.

Finance Minister Brian Lenihan has stressed that the four-year recovery plan belongs to the Government and was not influenced by the European Commission or the IMF.

But Mr Gormley fumed at Phil Hogan that Fine Gael plans to "renegotiate" the minimum wage were rubbish.

"That, I am afraid, is completely nonsensical because this was the first demand of Olli Rehn and others that this had to be in the plan," he said.

The remarks were met with confusion from the Opposition benches and other Government TDs as the Cabinet had always maintained the plan was theirs alone.

Under pressure, Mr Gormley backtracked somewhat to offer a meek retraction, stating: "It was one of the things he [Olli Rehn] said to me."

A source at the Department of Finance insisted the European Commission was not given prior sight of the plan and did not make specific demands for what should be in it.

"The EU/IMF/ECB saw an outline of the plan over the weekend and indicated their broad approval.

"The Cabinet have had long intensive meetings on the plan in recent weeks and nothing was taken out or added to the plan on the instigation of these international bodies," the department said.

A spokesperson for Olli Rehn said: "This is not our plan. It is the Government's plan and it is up to the Government to put into it what they wish."

kdoyle@herald.ie