Enda Kenny (Mayo, Fine Gael)

I propose to take Questions Nos. 3 to 5, inclusive, together.

I attended an extraordinary meeting of the European Council and an informal meeting of the Heads of State and Government of the euro area in Brussels on 11 March. There will be a further meeting of the European Council on 24 and 25 March. As I will be making a statement to the House later, I will confine myself to some brief remarks about these meetings.

The extraordinary meeting of the European Council was convened by President Van Rompuy to discuss developments in Libya and the southern Mediterranean region and set the political direction and priorities for future EU policy and action. We agreed on the importance for Europe of developing a new enhanced long-term partnership with the countries of the southern Mediterranean area as they move toward democracy.

The informal meeting of Heads of State and Government of the euro area was convened to discuss how to develop stronger economic policy co-ordination in the euro area. This was an important stepping stone towards the meeting of the European Council that will take place later this week.

Leaders agreed on a "pact for the euro" aimed at fostering competitiveness and employment and contributing to sustainability of public finances and restoring financial stability. There was also important agreement on three features of the temporary European Financial Stability Facility, EFSF, and the permanent European Stability Mechanism, ESM. Effective lending capacity was increased to €440 billion for the EFSF and €500 billion for the ESM. Both will have the capacity to intervene in the primary debt market. Interest rates will be lowered to take greater account of debt sustainability, while still complying with IMF pricing principles. Finance Ministers were asked to complete work on the design of the new ESM, which will enter into force in 2013, in time for this week's European Council.

It was agreed that there should be a reduction of 1% in the rate that applied to loans to Greece which do not take place under the EFSF, as Greece is not in that package. The maturity of Greek loans was also extended to 7.5years. In return, Greece committed to speedily completing its €50 billion privatisation and real estate development programme.

I briefed colleagues on the severe economic challenges that Ireland faced and the pain this had meant for the Irish people. I restated our commitment to the EU-IMF programme and reaching the 3% deficit target by end-2015 and recalled the extensive adjustment measures already undertaken. I stressed the importance of getting Ireland back onto a path of sustainability. I briefed European colleagues on the situation in our banks and the challenge this represented for us. I noted the stress tests that were under way. These are being carried out independently and due to be finished by the end of the month.

While Ireland would welcome a lowering of the interest rate it has to pay, it was not possible to reach agreement on this issue at the meeting on 11 March. Discussions on the issue are continuing. These will be difficult, but I am convinced that we can find a way forward. I can reassure the House that, while I will be as constructive as possible in seeking to reach agreement, Ireland's 12.5% corporation tax rate is not up for negotiation. It is central to our ability to attract inward investment and secure our economic recovery. I know that I have the overwhelming support of the House on this issue.

The issues before the European Council this week are important. It is expected that the Council will adopt a wide range of measures forming a full and comprehensive package designed to lay the ground for sustainable and job creating growth. I expect that the Council will also take stock of international developments, including in Libya and Japan.

With regard to a greater role for eurozone summits, it is the Government's position that no new formal structures are needed. However, it should continue to be possible for Heads of State and Government of the eurozone to meet as required.

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