The European Commission has expressed concerns about the size of our budget deficit. Our public finances are expected to be in the red by 5.5% this year, and 6.5% next year, which goes against EU stability rules. Under EU rules, governments are supposed to keep borrowing below 3% of GDP.The Government is to be asked to reduce borrowing levels to below 3% of our GDP, and if it doesn't, EU authorities will take action against Ireland. The pact allows for a government to be fined if it fails to bring its deficit below the 3% ceiling over three or four years, although this is regarded as more of a theoretical possibility — in practice it has never happened.
The Commission has forecast that the situation will only get worse, estimating that the difference between Ireland's spending and revenues will rise to 6.8% in 2009 and 7.2% in 2010.
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