Negotiations with the European Commission over the fate of rent and rates relief for businesses in Dublin's docklands are likely to result in the phasing out of special measures at the end of this year, Brussels sources say.
Meanwhile, EU finance ministers remained deadlocked over proposals for a withholding tax on non-resident savings accounts, with the British chancellor, Mr Gordon Brown, virtually alone against his 14 fellow ministers but still insisting that "we are winning the argument". The British say that the costs of enforcing the directive would make its eurobond market uncompetitive and drive it out of the City.
Reluctantly, the Finnish EU presidency has been forced to put the issue on the agenda for the Helsinki summit. "It will go to the summit," a presidency spokesman said, adding that the only question was whether finance ministers would meet again on the eve of the scheduled December 10th-11th meeting. The Minister for Finance, Mr McCreevy, yesterday appeared to pave the way for a setback on the docklands issue when he told journalists here that what appeared to have been an agreement with the last Commission had been reopened by the new commissioner for competition, Mr Mario Monti. The two men had been in "difficult" talks for the past two months, but hoped to resolve the issue by Christmas. The issue is likely to go as an agreed agenda item to the December 22nd Commission meeting, a source says.
Mr Monti is understood to be adamant that any deal must respect the broad principles of the Commission's new guidelines for industrial subsidies, or what are known as "regional aids". These explicitly rule out "operational" or day-to-day aid to companies in non-Objective One areas. Rent and rates relief are considered operational aid. The only room for manoeuvre, sources say, is in the transitional phase-out period for the incentives, introduced in 1989.
Mr McCreevy said that the issue of proposed assistance to the National Conference Centre (NCC), based on similar aid, is being dealt with separately. But Commission sources say that the questions raised are the same and that any solution is likely to be broadly similar.
While business in the docklands is believed to have accepted that the incentives will not stay forever, the prospect for the NCC is bleak, as State aid, in addition to £26 million (€33 million) in expected structural funds, has been seen as vital to viability.
The Ecofin meeting began with a meeting of euro zone ministers, who reviewed a new European Commission forecast that the zone's economy could grow by 2.9 per cent next year.
They agreed that the brighter growth picture as well as the burgeoning US current account deficit indicated that the euro would rise against the dollar in the coming months.
"The fundamentals of the euro are good and will get better with this recovery, which now is certain," the French finance minister, Mr Christian Sautter said.
