Brexit isn’t a good enough argument to persuade the EU to loosen its strict budgetary rules to allow for more spending, Finance Minister Michael Noonan has signalled.
Mr Noonan has said he wants to spend more money on much-needed capital investment, but argued that he is hamstrung by the European Union’s fiscal rules, which limit the spending ability of a member state.
The minister will travel to Brussels today for his last meeting of the Eurogroup of euro-area finance ministers, followed by a more formal meeting of all EU finance ministers tomorrow.
On Wednesday, he’s due to go to Luxembourg to lobby the European Investment Bank for infrastructure loans, which may help plug funding gaps without breaching the budget rules.
Outgoing Taoiseach Enda Kenny said last week the fiscal rules should be changed to allow for spending on capital infrastructure – a view pushed by organisations such as Ibec.
Asked if he will request flexibility in the rules given the impact of the EU referendum, the minister suggested Brexit wouldn’t be a good enough excuse.
He said there is an “unusual event” clause in the Stability and Growth Pact allowing for exceptional spending directly linked to unusual events outside of the control of government.
The clause is granted on the basis of individual case-by-case assessments and, to date, has only been granted to six member states in light of refugee-related costs, and three member states following submissions based upon security-related expenditure.
Accordingly, any application for leniency under this clause would require that Ireland demonstrate the British exit from the EU has had a “major impact on the financial position of the general government”.
“Notwithstanding the fact that the sharp appreciation of the euro-sterling bilateral rate has been the most immediate impact from Brexit and is one of the principal factors behind the decline in the value of merchandise exports to the UK last year, no material impact on Ireland’s general Government balance has been observed to date,” said Mr Noonan.
He told Sinn Féin’s Pearse Doherty, in a response to a parliamentary question, that Ireland is exploring existing and possible future EU measures that could potentially help the Government in mitigating the effect of Brexit.
This could also include tapping the European Investment Bank for cheap money.
“Ireland will also, in light of developments, continue to make a strong case at EU level that the UK’s withdrawal represents a serious disturbance to the Irish economy overall and that we will require support,” he said.
Mr Noonan has said he is in favour of the fiscal rules, but in the past he has bemoaned their application.
Last year, he took a swipe at Europe’s statistical agency Eurostat and the European Commission, arguing they need to “straighten out” how they apply the rules.
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