Rehn & Lenihan Meet
EU Economics Commissioner Olli Rehn will discuss details of the four year budget plan during a two hour long meeting with Finance Minister Brian Lenihan on Monday.
The Commission expected to receive the government’s outline this week showing how it intends to cut the budget deficit to 3% of GDP by 2014.
There were fears that the government would delay releasing the details until after the Dublin by-election but as markets continued to push up the country’s borrowing costs to record highs, Taoiseach Brian Cowen rushed to reassure that all would be ready by mid November.
EU sources expressed relief that it would happen “relatively soon”. There were concerns that the government was releasing information piece by piece having first announced that they needed to cut €15 billion of the deficit and then yesterday coming out with the €6 billion cut in the 2011 budget.
“It is difficult to take a position on figures when it is not backed by concrete measures”, the source said.
Mr Lenihan and Mr Rehn are in regular contact but Monday’s meeting, to be followed by a joint press conference in Dublin, is expected to be particularly intense.
“Mr Rehn wants to discuss in detail all the elements in and around the four year plan”, said his spokesperson.
He is also meeting the three opposition parties, Central Bank Governor Patrick Honohan, the business and employers organisation IBEC, and trade union representatives from ICTU. He will also address the IIEA, the Dublin based European and international affairs think tank.
“He wants to have these discussions not only with Mr Lenihan who he meets regularly but also with all those that can contribute to redress the budgetary situation in Ireland.
“There is a concern about the future of the Irish economy and we are ready to contribute to the different perspectives. We want to listen to their perceptions of the situation and the measures to be taken and make the point that this is a serious situation”, he said.
His spokesperson reiterated that Mr Rehn was not going to Dublin to garner support for the government’s budget measures, and added, “We are in a listening mode when it comes to the four year plan”.
The EU is anxious that Ireland proves to the markets that it can remain solvent by publishing a detailed sector by sector plan of how and where it will raise the money and cut spending over the next four years to meet the deficit deadline of 3% of GDP by 2014.
But some commentators fear that even that will not convince the markets that are daily punishing the peripheral eurozone economies including Ireland.
Economist at NCB Stockbrokers in Dublin, Brian Devine said there was no doubt that Ireland was serious about tackling its fiscal deficit. “The market doesn’t seem to care though..events have surpassed the unveiling of a credible, conservative multi-year budget”, he said.
When asked if it was time that Portugal turned to the EU-IMF’s €775 billion rescue fund – given that the cost of holding it’s debt and that of and Ireland were breaking new records daily - Mr Rehn’s spokesperson refused to comment saying they do not comment on short term market movements.
The charge on Irish 10-year debt reached a new high yesterday when it rose to 530 basis points over the German equivalent and more than the 421 basis points for Portuguese debt.