State's Funding At Risk Says Cowen

Mr Cowen has claimed that a failure to make the proposed cuts in December's budget could put the Irish State's funding "at risk".

The Taoiseach's comments were made in response to suggestions by Labour Leader Eamon Gilmore that the suggested cuts of €6 billion in the upcoming budget would "work against job creation and hamper growth".

Mr Cowen said the adjustments were necessary and that shirking them would put at risk the funding of the State after July of next year.

"What will happen then is that we will be faced with a situation where we will only be able to spend €31 billion,” Mr Cowen said.

“Being only able to spend €31 billion would involve a serious adjustment in the level of services that could be provided. No responsible government, therefore, could contemplate that approach.”

However, Mr Gilmore remained sceptical saying there was the cut of €4 billion last year led to no growth and now it is intended to have a cut of €6 billion in next year's budget and the Government expects growth of 1.75%.

The economic wrangling is taking place just European commissioner for economic and monetary affairs Olli Rehn visits the capital.

Last week Mr Rehn made a memo response to the Government's plan to reduce the deficit, saying that he welcomed the "continued commitment" to reducing the deficit to below 3% by 2014.

"This provides an important anchor for financial markets and also underlines the Irish authorities' commitment to putting public debt on a sustainable downward path in the near future.

Mr Rehn described the €6 billion reduction as "appropriate", as it would strike a balance between allowing the recovery to strengthen and addressing budgetary challenges in a "timely and frontloaded fashion".


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