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Ireland's Finance Minister Michael Noonan Photo by: PA Wire/Press Association Images

French will veto any interest rate cut for Irish debt

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Ireland's Finance Minister Michael Noonan Photo by: PA Wire/Press Association Images

The French have made fresh vows to veto any plans to cut the interest rate charged for Ireland’s bail-out by the European Union and the IMF.

The government in France has again said that it will only agree to an interest rate cut if Irish corporation tax rates are increased.

Irish government sources have confirmed to the Irish Examiner that: “The French are digging in. They will use their veto.”

Minister for Finance Michael Noonan has reacted to the latest threats by telling the French that he will not budge on Ireland’s 12.5 per cent corporation tax rate.

Noonan has pointed out to the French that the corporation tax rate is responsible for Ireland’s export-led growth. As a result, he is willing to forego the saving on interest repayments of between €148 million and €200m a year.

“I will not be waltzed around by any member state, especially when the gain is so small in contrast to the potential industrial promotion,” Noonan told the Irish parliament.

“The value of the reduction is being exaggerated and, in my view, too much is being made of this.

There is no way whatsoever that I will negotiate with anyone in the French government to concede anything on the Irish corporation tax rate for that amount of money.”
Ireland is paying close to 6% for its €67.5 billion loan, while Greece and Portugal are paying closer to 5%.

Noonan also sent a message to French President Sarkozy, who is against any reduction in Irish interest rates, and to German Chancellor Angela Merkel who supports his stance.

He added: “To those who are opposing us and trying to force us to change our corporation tax rate, I tell them once more today that they have no negotiating position.

“The amounts of money are so small in regard to the adjustments we are being required to make that we will not concede.”

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