EUROPEAN REACTION:EU ECONOMICS commissioner Olli Rehn warned that "difficult" decisions remained to be made as he welcomed as "appropriate" the Government's adoption of a €6 billion target for cutbacks and taxation measures in next year's budget.
At the end of a day on which Irish borrowing costs hit another record, Mr Rehn said the Government’s commitment to achieving a budget deficit below 3 per cent by 2014 was an “important anchor” for financial markets.
A statement from Mr Rehn, who travels to Dublin on Monday for meetings with the Government and Opposition parties, went further than his response last week to the adoption of the €15 billion target for the measures to be taken in the next four years.
While he withheld judgment on that occasion, last night he quickly endorsed the €6 billion target which was set out in a note issued by Minister for Finance Brian Lenihan.
“A 2011 budget involving a consolidation effort of €6 billion, as indicated in the note, would be appropriate, as it would strike a balance between allowing the recovery to strengthen and addressing budgetary challenges in a timely and frontloaded fashion,” Mr Rehn said.
The continued commitment to bring the public finances under control by 2014 also underlined the Irish authorities’ commitment to putting public debt on a sustainable downward path in the near future, he added.
“Difficult but necessary policy choices are still to be made as regards the measures needed to reach this objective.”
The publication of the €6 billion target and a new economic forecast follows extensive dialogue with top-level officials in the European Commission and the European Central Bank.
In recent weeks, the commissioner publicly urged the Government to set out concrete reform, taxation and expenditure measures to be executed in each of the next four years.
The EU executive said it welcomed the commitment of the Irish authorities to accompany the budgetary plan with ambitious structural reforms.
“Indeed strong growth and employment enhancing reforms are needed to properly underpin the authorities’ fiscal adjustment strategy,” it said.
“The concrete measures supporting the fiscal consolidation should limit the negative impact on growth, private sector employment and financial stability.”
In addition to his engagements with political leaders, Mr Rehn will also meet officials from the Central Bank and representatives from the social partners while he is here.
