EU finance ministers to back Irish censure
Ireland is to come under immense pressure from EU finance ministers to pull back from plans to expand the 2001 budget which the EC says could cause inflation and undermine the euro.
The ministers, who meet in Brussels on Monday, are expected to support a ‘‘censure’’ drawn up by the European Commission against Ireland’s budgetary plans.
The Commission warned Ireland last month that its expansionary plans for 2001-2003 increase the risk of overheating the Irish economy.
Irish inflationary pressures rose during 2000, resulting in an average annual inflation of 5.6%, well above the 2.0% euro-zone target.
In figures released today by the Irish government, inflation was down to a rate of 5.2% in January, compared to 5.9% in December.
The planned Irish budget for 2001 include tax cuts and large increases in current and capital expenditure. The EU censure could be embarrassing for Ireland, but the Irish government has reacted defiantly.
‘‘There will be no change in the budget and no change in economic policy,’’ said Finance Minister Charlie McCreevy.
Deutsche Bundesbank Vice President Juergen Stark said today that a censure for Ireland would set a precedent in the 15 nation bloc, adding that if Ireland was open to such criticism, then larger EU countries could also expect similar treatment if such situations emerge in the future.
‘‘Many countries, including Germany, agree with the Commission, but there is obvious sensitivity to provoking a very public squabble that would benefit nobody,’’ said Alison Cottrell, European policy analyst at UBS Warburg in London.
Ireland expects economic growth of at least 5.7% and forecasts an average budget surplus of 4.2% of gross domestic product during the 2001 budgetary period.
