Pressure on Ireland to lower deficit will continue
Pressure on Ireland to cut its deficit and debt will continue despite the country hitting its targets as prescribed by the European Commission.
There is some controversy over France getting an extra two years to meet its 3% deficit target despite having failed to fulfil its targets.
Instead they have been told to make a structural effort of 0.5% of GDP this year.
“Taking into account all the relevant factors including among others weak growth and implementation of structural reforms, it was concluded that the opening of the Excessive Deficit Procedures at this stage are not warranted,” said commission vice-president Valdis Dombrovskis.
The rules allowed for some flexibility and the commission announced they would be making full use of this because of the lack of growth in the EU economy.
The commission decided not to take action against Italy, Belgium and Finland that were said to be at risk of breaching the stability and growth pact in November, because of their high debt.
Ireland’s imbalances require specific monitoring and decisive policy action.
“Despite a marked improvement in the economic outlook, risks related to the high levels of private and public sector indebtedness; remaining financial sector challenges, in particular with regard to the banks’ profitability, and labour market adjustment marked by high structural unemployment, continue to deserve close attention”.
By mid-April, all countries will present their reform programmes and their stability or convergence programmes, and based on these the commission will present each with a specific set of recommendations for tackling problems in their economies for this year and next.
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