Kenny rejects rate cut over corporation tax threat

Ireland was offered a 1 per cent cut in the interest rate it pays the European bail-out fund but Taoiseach Enda Kenny turned it down because EU heads of government wanted changes in the Irish corporation tax in return.

The offer was made early on Saturday morning at the EU summit in Brussels, following seven hours of negotiations during which Kenny clashed repeatedly with French president Nicolas Sarkozy.

A 1 per cent cut would save Ireland around €450 million a year in interest payments. Greece secured a 1 per cent reduction in its borrowing rate.

Ireland is being charged up to 6.7% interest on some of the bailout funding which is quite punitive when compared to the rate charged to Greece (average 5.2%).

Round 1 to Kenny ? Yes……but lets hope further negotiations do yeild a reduction in those interest rates.