THE COST of Ireland’s borrowing will go down as international financial markets absorb the implications of the Budget, Taoiseach Brian Cowen said last night in Brussels.
Arriving for the European Union summit, he responded to the fact that international investors have sold Irish Government bonds in recent days, as a result of concerns about Greece’s public finances.
Mr Cowen expressed confidence that the rates applying to Ireland would fall once the markets “acquaint themselves” with the scale of the Government’s actions.
He said that the reaction of the international markets to ongoing developments was an indication of the need to instil confidence in the direction the country is going.
“I think it has been well received internationally,” said the Taoiseach. “It can’t determine totally our policy, but it is an important consideration for the country getting access to funds as we make this adjustment over the next few years.”
He said one of the purposes of the Budget was a determination to show that the Irish people could manage their own affairs and do whatever was necessary to stabilise the deficit.
“Having stabilised it and having sought to protect to the greatest extent we can the more vulnerable people in society, we now proceed to work for recovery. I think it has been well received in that respect, and well received at home, too,” said Mr Cowen.
The Budget measures received support from an important quarter last night when EU economic and monetary affairs commission Joaquín Almunia said the Irish people and authorities should be commended for the “considerable” steps they were taking to tackle the fiscal crisis.
“In sticking to the consolidation target for 2010 that was announced in the April supplementary budget, the Irish Government is clearly demonstrating its continued commitment to implementing a sustainable and credible fiscal consolidation strategy in these challenging times,” Mr Almunia said.
“While more remains to be done in the coming years, the Budget is an important step towards first stabilising and then gradually reducing the Irish general government deficit to 3 per cent of GDP by the 2014 deadline set by the commission and endorsed by the [European] council under the excessive deficit procedure.”
Mr Almunia will oversee the restructuring of Allied Irish Banks and Bank of Ireland when he becomes EU competition commissioner next year.
Recently, he extended the deadline for the Government to bring the budget deficit within EU limits by one year to 2014.
Speaking in the Dáil before he left for Brussels, Mr Cowen said reductions in pay and welfare had to be seen in the context of falling prices with the consumer price index down 6.6 per cent in the 12 months to October and a further slight fall expected in 2010.
“The reduction in social welfare payment rates is less than the fall in prices. The value of the payments in people’s pockets will, if anything, be higher than it was previously,” he said.
Debate on the Social Welfare Bill, which gives effect to the new rates, began in the Dáil yesterday with a furious row over procedure. The Labour Party attempted to prolong the debate on the measure which is due to conclude all stages by this evening. Objections to taking the Bill were eventually overruled by Ceann Comhairle Seamus Kirk but Labour whip Emmet Stagg warned that the party would continue to use all possible “parliamentary tactics” to oppose the legislation.
“This is an honourable part of our parliamentary tradition going back to the days of Parnell,” said Mr Stagg, adding: “This is one of the most nasty and vindictive pieces of legislation ever to have come before the House which will cut the incomes of some of the poorest and most vulnerable sectors of Irish society.”
