The Minister for Finance, Mr McCreevy, has claimed that he has inflation under control and predicted that prices could rise by less than 4.5 per cent this year. The Minister defended his management of the economy in the face of sharp criticism from EU partners, suggesting that some of his critics were motivated by envy.
Speaking in Brussels after a meeting of EU finance ministers, Mr McCreevy welcomed the fall in inflation announced yesterday and said he was optimistic about the outlook for the rest of the year.
"There will be a further decrease in the months ahead. If favourable factors like the oil price and a stable currency continue, then the rate will be less than 4.5 per cent," he said.
The Minister said that he put up a robust defence of his economic policies at a meeting of euro-zone finance ministers on Thursday evening. He rejected claims that December's Budget could fuel inflation. The European Commission will next week issue a report on the Irish economy that is expected to criticise the Budget's tax cuts as inflationary.
The Commission cannot take any concrete action to enforce its opinion but it can propose that Ireland should be censured with a "formal recommendation". Mr McCreevy said he believed that such a step would be more damaging to the EU's image than to Ireland's.
"As a matter of credibility, people outside the EU will be amused that the most successful economy in the EU would be the first country to get a formal recommendation," he said.
The Minister said that some of his critics, who were believed to include the French and German finance ministers, were still smarting after Ireland's opposition to limited tax harmonisation at last December's Nice summit.
"Nice was a very bruising encounter and the run-up to Nice was bruising as well. The Irish taxation position is at the background of a lot that happens at the EU," he said.
The European Monetary Affairs Commissioner, Mr Pedro Solbes, yesterday acknowledged the improvement in Irish inflation and said it would be taken into account.
"These are excellent figures for the Irish economy and of course, in our assessment [of Ireland's budget plans], we will take into consideration these facts," Mr Solbes told reporters at the end of the meeting of EU finance ministers.
