Brussels, 06/02/2001 (Agence Europe) - Irish Deputy Prime Minister Mary Harney has challenged the Commission's criticism about the budgetary policy of her country. Last month, the Commission, while examining the updated Stability Pacts of several Member States, had proposed to the Council that it adopt a recommendation inviting Ireland to put an end to the inconsistency between the expansionist aspects of its budgetary planning and the European Union's Broad Economic Policy Guidelines (see EUROPE of 25 January, p.7). Commissioner Pedro Solbes had in fact felt that, given the risks of over-heating in its economy, Dublin should follow a stricter budgetary policy. Mary Harney replied, in an open letter published by The Financial Times, that the "Irish economic strategy is fully integrated with the economic and monetary union and single market projects. Our policies accord with the broad economic policy guidelines for 2000". Furthermore, Ms Harney states that Europe must focus on micro-economic reforms and market liberalisation. She stresses that inflation in Ireland has fallen from 5.6% in 2000 to 4.6% at the present time and that its government has confirmed the budgetary surplus of 4% of GNP forecast for 2003. In her view, the reduction in tax pressure and the rise in spending will have a minimal impact. She went on to say that "only about 0.13 percentage points to Irish inflation after three years", which will have an effect that is "virtually nil" in the euro-zone.
The Ecofin Council of 12 February should decide whether to address recommendations to Ireland or not. We recall that this is the first time that the Commission uses the recommendation instrument, giving its views on the stability programme of a country.