Taoiseach to back creation of Europe-wide banking union

MOVES TOWARDS the creation of an EU banking union and plans for a stimulus package to promote job creation will be backed by Taoiseach Enda Kenny at this week’s EU summit in Brussels, according to Government sources.

However, there is no expectation that a new deal on Ireland’s banking debt will emerge from the summit.

The Taoiseach will tomorrow inform the Dáil of his priorities going into the meeting that takes place against the background of the continuing euro zone crisis.

In a letter to other EU heads of government after the Irish people approved the fiscal treaty, Mr Kenny emphasised the need to address the crisis in the banking sector, which he said had become the major source of the loss of confidence in Europe’s banks.

“The solution is, in Ireland’s view, to accelerate moves to develop a joint response to the banking crisis in Europe,” he told his fellow EU leaders.

Mr Kenny is expected to press this view at the Brussels meeting on Thursday and Friday as he believes a banking union can be achieved very quickly if the political will exists in the 17 member states of the euro zone.

The Taoiseach has already told the Dáil he does not expect that progress towards fiscal union can take place at the same pace and he does not believe it can be achieved in the shorter term. His other priority at the meeting will be to back moves towards a stimulus package for the EU economy.

One of the difficulties he faces is that emerging proposals for a stimulus appear to be focused on transnational projects that would not have much impact on Ireland. The proposals relate to project bonds that will be financed by the European Investment Bank.

Up to €60 billion will be injected into investment projects, with the aim of getting spending of three times that amount through partnership with the private sector.

A focus on the high-tech sector and the green energy sector in draft proposals is welcome news for Ireland, but the Taoiseach will be seeking the maximum amount of flexibility in their application.

He is expected to stress the need to focus project bond investment in countries such as Ireland, Portugal, Greece and Spain that are in EU programmes.

On the issue of the promissory note on banking debt, Mr Kenny has told the Dáil that it remains a priority, but he does not expect answers to emerge at the summit.

Minister for Transport, Tourism and Sport Leo Varadkar said Ireland had to bring its budget into balance, irrespective of what happened in Europe. “That is nothing to do with Europe . . . It is something we have to do with ourselves,” he said.