Ireland is set to become the first EU member-state to receive an "official recommendation" criticising its economic policies when finance ministers meet in Brussels today. The Minister for Finance, Mr McCreevy, is likely to be alone in voting against the reprimand, which the European Commission claims is necessary to prevent the Irish economy from overheating.
Observers had expected Mr McCreevy to launch a last-minute diplomatic campaign of bilateral meetings and telephone calls today but on arrival in Brussels last night he said he would not be doing so. He accepted there was little hope of changing the minds of his fellow finance ministers.
Despite broad support for the reprimand against Ireland, there is mounting criticism among EU member-states of a Commission proposal to further enhance economic policy co-ordination in the euro zone. The Economic Affairs Commissioner, Mr Pedro Solbes, wants euro-zone finance ministers to consult their EU counterparts about key budget initiatives before they are introduced.
Some member-states, believed to include Italy and Spain, resent the fact that Mr Solbes made his proposal without consulting EU finance ministers. Others feel it is politically impractical to seek to prevent governments from introducing popular budgets in advance of a general election.
Mr McCreevy will meet other euro-zone finance ministers for breakfast this morning but a decision on the reprimand against Ireland will not be taken until ministers from all 15 EU member-states meet later in the day.
Britain has indicated it will abstain during the vote, on the grounds that the dispute over Ireland's economic policies is a matter for euro-zone ministers.
The Commission believes December's Budget will add to the danger of overheating in the Irish economy and that it is in clear breach of economic policy guidelines agreed by both Mr McCreevy and the Taoiseach, Mr Ahern. The Government argues that the Budget's tax cuts and public spending increases were necessary to maintain social partnership and will not fuel inflation.
Irish officials have given a cool reception to Mr Solbes's proposals to further enhance economic policy co-ordination. The Commissioner wants a more systematic assessment of euro-zone economic policies based on a set of rules that would limit the room for manoeuvre enjoyed by finance ministers in drawing up their budgets.
Finance ministers would inform their EU counterparts about key points in their budgets before they are introduced in parliament and would take into account the views expressed by euro-zone ministers.
If Mr McCreevy fails to heed the recommendation, the Commission may propose a system of sanctions that could oblige Ireland to pay a fine for breaching the agreed economic policy guidelines.