Tommy Broughan (Dublin Bay North, Independent)
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90. To ask the Minister for Finance his views on the recent announcement by the EU Commission that EU expenditure caps will be loosened by 0.5% or more in 2017 to stimulate the economies of the 28 members; and if he will make a statement on the matter. [36504/16]

Michael Noonan (Limerick City, Fine Gael)
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I am assuming the Deputy is referring to the draft Council recommendation on the economic policy of the euro area (COM(2016) 726 final) proposed by the European Commission on the 16th of November 2016.  This recommendation is addressed to the euro area rather than the EU28.

For the euro area as a whole, the Commission suggested that, in order to strengthen economic recovery, a fiscal expansion of up to 0.5% of GDP at the level of the euro area as a whole in 2017 is desirable.

I would point out that several Member States have questioned firstly, the legal basis for the Commission's recommendation and secondly, the appropriateness of such a policy.  The draft recommendation (it has not yet been adopted by the Council) notes the need for appropriate differentiation of fiscal effort depending on the Member State's position with regard to the requirements under the Stability and Growth Pact as set out below:

"(i) for Member States which are over-achieving their fiscal objectives, use their fiscal space to support domestic demand and quality investments, including cross-border ones, as part of the Investment Plan for Europe;

(ii) for Member States that need further fiscal adjustments under the preventive arm of the Pact, make sure to be broadly compliant with the requirements of the Stability and Growth Pact;

(iii) for Member States under the corrective arm, ensure a timely correction of their excessive deficits, including by providing fiscal buffers against unforeseen circumstances. Improve the composition of public finances by creating more room for tangible and intangible investment and ensure the effective functioning of national fiscal frameworks."

The recommendation stops short, however, of advocating specific loosening by respective Member States to support the 0.5% of euro area GDP looser fiscal stance.

From an Irish perspective, Government policy is to utilise the fiscal space available under the rules and this is reflected in Budget 2017, which was found to be broadly compliant with the Stability and Growth Pact, as per the 16th of November 2016 Commission Opinion.