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EU warns Ireland not to ease austerity

Tuesday, December 10 11:08:57

The European Commission has cautioned Ireland that it must not ease up on austerity and that the country should seek a E2.5bn adjustment in cuts and new taxes in next year's Budget.

A leaked bailout report by the Commission has suggested that a larger budget adjustment than planned may be required for 2015.

According to sections of the report seen by RTE News, the commission says that a commitment to bring the Government deficit below 3pc of GDP by 2015 is not yet underpinned by broad policy measures.

The report says current predictions are relying on the assumption of an adjustment of E2bn for 2015.

However, the European Commission draft report suggests that based on the Troika's forecasts, a larger fiscal adjustment of around E2.5bn may be required to reach the deficit target.

The report comes days before the country exits the bailout programme and ahead of the publication of the Government's medium term fiscal plan next week.

Government sources say the report was written before the end of November exchequer returns, which were better than expected.

Overall, the report says Ireland has performed very well under the bailout programme. It says implementation of the programme has remained strong overall.

However, the report is strongly critical of the delays in implementing measures in the health sector - it states that delays in 2013 health sector measures endanger the 2014 health budget.

It says that around one third of the health savings for 2013 will not be achieved due to implementation delays. Savings from other departments are necessary to keep the overall expenditure in line, it adds.

The commission notes that procedures have been put in place to deal with mortgage arrears but it still has concerns in this area. It notes that courts do not have the resources to process what it believes will be the "upcoming wave of legal cases".