Noonan to challenge EU budget stance on small states

Minister for Finance Michael Noonan is to press the European Commission to extend greater budget flexibility to all EU member states at a meeting in Brussels on Tuesday, amid growing frustration in Europe about perceived leniency towards France.

The European Commission has proposed to grant France an extra two years to meet its budget deficit targets set by Brussels. The euro zone’s second largest economy has repeatedly missed its deficit targets as the government of François Hollande struggles to implement reforms .

Ireland is one of a number of member states increasingly unhappy with the apparent leniency towards France, particularly as smaller states, such as Greece, struggle to adhere to strict fiscal targets.

France has also succeeded in pushing a consideration of corporate tax avoidance on to the agenda at the finance ministers' meeting, an issue highly sensitive for Ireland given the ongoing European Commission investigation into our tax arrangements with Apple.

Frustration

Mr Noonan is expected to intervene on the contentious issue of EU budget rules during the discussion. There is increasing frustration in Government circles as it draws up its budgetary plans for next year at the EU’s insistence that Ireland leverages its strong economic performance to reduce its debt burden rather than to invest in the economy.

The Coalition is understood to be planning an expansionary budget in October, focusing on investment in healthcare, housing and welfare, following years of austerity.

Despite having the strongest-growing economy in Europe, Ireland is obliged to adhere to strict debt and deficit targets as it is subject to the EU’s deficit procedure and to post-bailout surveillance by the EU-IMF troika.

Sanction

Earlier this week, former EU economics commissioner

Olli Rehn

criticised his successors at the commission for failing to sanction France for repeated flouting of EU budget rules.

The issue is dividing member states and the commission. Speaking on Monday evening in Brussels, eurogroup head Jeroen Dijsselbloem said France had committed to advancing a plan for €4 billion in savings by April, with more detailed plans to reform the economy due in May.

Meanwhile, euro zone finance ministers confirmed that technical negotiations on Greece’s reform package will begin on Wednesday in Brussels, amid increasing frustration over the lack of progress from Greece since the euro group agreed to a four-month extension of the Greek bailout just over two weeks ago.