The changes proposed by the EU Commission earlier this week will create difficulties for IDA Ireland and the drive to attract industries to set up in Ireland. EU Commission sources indicated yesterday that the loss of Objective One status for Ireland will mean that its industrial agencies will have to amend the level of grant aid offered to industry. EU money had helped to fund grand-aid packages.

EU sources said yesterday that the kind of grant aid which has been allowed up until now will have to cease after the year 2000 because of the changes which are being proposed in the "Agenda 2000" document.

Because of Objective One Status, Ireland has been entitled to two-thirds of the EU's structural funding.

The sources ruled out any possibility of Ireland retaining its Objective One Status because the EU will base its calculations on the years 1992-1995 inclusive.

When Ireland reverts to Objective 2 status, it and the other countries designated in that category, will only be entitled to draw from 10 per cent of the structural funds.

However, it has emerged that the Commission may allow higher rates of support to disadvantaged regions and it will be up to the different countries to define the areas under its new status.