Press Release

SIPTU president says EU Budget rules must not strangle Irish recovery

Date Released: 27 March 2015

SIPTU General President, Jack O’Connor, has warned that a rigid interpretation of EU budgetary rules risked strangling Ireland’s fragile economic recovery and must now be handled flexibly by the European Commission.

“If the Government cannot persuade the Commission of the merits of its case it should press ahead with targeted increases in spending, particularly public investment, to alleviate some of the hardship of the crisis and that improves our capacity to grow. This would demonstrate the ludicrous nature of EU budgetary rules that only serve to delay Ireland’s recovery.”

The SIPTU president was speaking at a meeting of the SIPTU Local Authority Professional Officers executive in Portlaoise, county Laois today (Friday 27th March).

Jack O’Connor said: “The Commission’s current interpretation of EU budgetary rules, which link spending rises to a complex ‘potential growth’ formula, would appear to limit any rise in public spending in Ireland next year to approximately 0.2 per cent of GDP, or roughly €400 million. This ‘Expenditure Benchmark’ is the wrong approach for Ireland at the current stage of our fragile economic recovery.

“The Commission is essentially working off estimates and forecasts that do not take sufficient account of the unique features of the Irish economy nor reflect the strong growth we saw last year and are likely to see over the medium term.

“Even the IMF this week suggested that the Commission should interpret the rules more flexibly in relation to Ireland. The IMF suggests that the Commission take greater account of the impact of multi-nationals in the Irish economy, of exchange rate fluctuations on Ireland (which trades more outside the euro area than most other member states) and of the fall in emigration since the peak of the crisis. All of these could serve to raise its estimates of Ireland’s potential growth, and hence our spending ‘limits’.”

He pointed to the fact that the new European Commission President, Jean Claude Juncker, has correctly identified boosting investment across Europe, including in Ireland, as one of the key challenges now facing Europe.

“It would be completely illogical if an overly rigid and dogmatic interpretation of EU budgetary rules by the Commission were to strangle Ireland’s fragile economic recovery,” Jack O’Connor said.


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