Taoiseach Enda Kenny declared the Government’s conflict with France over corporate tax was over as euro zone leaders moved tonight to cut the interest rate on Ireland’s bailout loan.
Warning that the reduction will ease the extent of cutbacks required in the 2012 budget, Mr Kenny said the conclusion of the emergency euro zone summit was good for the Irish people and that no conditions were attached to the rate cut.
French president Nicolas Sarkozy argued for months that Ireland should provide a quid pro quo on corporate tax in return for a rate cut.
While a summit communiqué commits Ireland to engage constructively in talks on a common consolidated corporate tax base (CCCTB), this position mirrors the stance Ireland adopted when the EU Commission unveiled legislative proposals on that front.
The communiqué also commits Ireland to participate constructively in “structured discussions” on tax policy issue under the Euro Plus pact Mr Kenny co-signed with his fellow leaders last March.
Asked whether the dispute with Mr Sarkozy over corporate tax was at an end, Mr Kenny said it was.
“I had a very cordial conversation with the French president,” he told reporters.
“There is absolutely no change in our position in this regard and the matters that you mention were never even raised at the meeting in any shape or form.”
Asked if that meant the discussion was now closed, he added: “It’s over, c’est fini.”
The Taoiseach said the European Financial Stability Facility bailout fund will lend to Ireland at a significantly reduced rate leading to annual savings between €600 million to €800 million on bailout loans.
“This will apply not only to monies yet to be drawn down but also to future interest payments on existing loans and that’s an important consideration,” Mr Kenny said.
“There are no conditions attached to the interest rate reduction and the conclusions of the meeting obviously bring about greater flexibility, an extension of the maturities and a number of other options that are opening for Ireland to consider including debt buyback if that were to be agreed.”
The Taoiseach said he was relieved at the outcome of the summit to the extent that it was good for Ireland.
However, he warned the question of tackling Ireland’s large budget deficit was separate to the effort to improve the sustainability of the national debt.
“This won’t have an impact on the budget from that point of view but it will ease the debt burden on Ireland and a saving to the taxpayer,” he said.
“We still have a massive budget deficit to bridge and that still means a very tough budget for Ireland and I’m happy to acknowledge that the Government will face those and comply with the conditions that we set out here in terms of the deficit as we move forward.”
Ireland’s diplomatic campaign to renegotiate the terms of the bailout had yielded a big dividend, he said.
“While some might have scoffed at the diplomatic connections and interactions that were involved from every minister and minister of state and our diplomats and business people, this has paid substantial dividends and that was self-evident to me today around that table,” he added.
“The conclusions of today’s meeting of the euro zone leaders marks a significant improvement in the programme of support and ultimately it reduces the cost of our debt, thereby lightening the burden on the taxpayer.
“The improvements that have been secured by the Government in terms of Ireland’s programme will underpin our debt sustainability, investor confidence and our economic recovery.
“The outcome reflects that the Government has been making an argument for quite some time that the EFSF should be more flexible and that the terms of the lending should be more consistent with returning to the markets and with recovery.”
