MOSCOVICI CONFIRMS NO CHANGE FOR IRELAND IN FISCAL RULES – Hayes
Brian Hayes MEP today said that European Commissioner for Economic and Financial Affairs Pierre Moscovici has informed him in a letter that there will be no change to the EU fiscal rules for Ireland for the upcoming budget.
“Commissioner Moscovici has made it clear that there won’t be any special deal for Ireland to change the fiscal rules to give us extra fiscal space in the upcoming budget.
“There are issues with the methodology behind the fiscal rules but it is clear that for any changes to occur with the fiscal rules, there needs to be agreement from all Member States. The Department of Finance has been in regular discussions with the Commission and other Member States over many years to seek changes to the fiscal rules and has negotiated many improvements. But this requires patient negotiations and has to be done with all Member States, the Commission cannot grant special deals.
“The fiscal rules do have an impact on Ireland’s fiscal space in budgets. Yet because we are currently running a deficit, there are more constraints on our budgetary capacity for increased spending and tax cuts. What is really important is that we achieve a balanced budget next year, as Minister Donohoe has committed to. If we achieve a balanced budget by next year, then we will have reached our Medium Term Objective under the Fiscal rules – meaning that there are far less restrictions on our spending levels as we will no longer be running a deficit. We will be freer to invest in things like housing and infrastructure.
“Minister Donohoe said in July that we effectively only have about €300 million worth of fiscal space for tax cuts and increased spending. On the scale of the overall budget for the whole of 2018, which will be around €60 billion, this is a tiny amount to play around with.
“Sticking to the fiscal rules is absolutely vital. The fiscal rules are there to ensure that we don’t follow pro-cyclical fiscal policies and so that we can prevent major economic downturns. Politicians of all parties are blaming the EU and the fiscal rules for what we can and cannot do. This is a cop out. It’s what we in Ireland have agreed to and put into national legislation. We should be embracing the fiscal rules as they are designed to keep our economy healthy and to ensure that governments do not become reckless with spending.”