Any attempt to unpick EU summit on bank debt must be resisted by Govt - McGrath

Fianna Fáil Finance Spokesperson Michael McGrath has said the government must strongly resist any attempt by EU partners to unpick the agreement reached at the EU Leaders’ Summit at the end of June. Deputy McGrath has called on the Irish government to urgently secure confirmation from the German administration that it still supports the agreement reached at the end of June and the achievement of an overall deal on Ireland’s banking debt by October as promised.

Deputy McGrath was speaking following comments by German Finance Minister Wolfgang Schauble which raised the prospect of the German government opposing the promised deal on Irish bank debt.

Deputy McGrath stated, “At the end of June, EU leaders finally accepted the need to break the link between bank debt and the sovereign debt of member states. This acceptance together with the agreement on the possibility of directly recapitalising banks and the reference to examining the Irish financial sector in order to improve the sustainability of our EU / IMF Programme appeared to present a major breakthrough for Ireland. On the back of this breakthrough, the Irish government heralded the summit as a ‘major game changer’ and said it expects a deal on our bank debt by October.

“In light of what was agreed by EU Leaders in June, the comments by Wolfgang Schauble today are both bewildering and unhelpful. He refers to Ireland’s progress at winning back the trust of the markets and says nothing must be done that generates new uncertainty. However, he ignores the fact that the outcome of the June summit has contributed to downward pressure on our cost of borrowing and the markets have essentially priced in a deal on Ireland’s bank debt. If such a deal is not forthcoming, the markets will react negatively and recent progress in accessing markets will grind to a halt.

“It is absolutely essential that Ireland secures an ambitious and comprehensive deal on banking debt. The comments by the most powerful Finance Minister in Europe are a cause of deep concern in that they cast doubt on the overall deal that has been promised and which we need for our economic recovery. The Irish government urgently needs to secure confirmation from the German government that it still supports the agreement reached at the end of June and the achievement of an overall deal on Ireland’s banking debt by October.”