Ireland should cut the 12.5% corporation tax rate if the European Commission insists on austerity budgets over the next three years, according to former Fine Gael TD George Lee.

Lee said the commission's deadline for Ireland to cut its budget deficit by the end of 2014 risked pushing the economy "from recession into depression" and that only an investment fund could save jobs and the banks.

"The 2014 deadline should be extended. I do not want to be irresponsible here. We cannot be crucified by it.

"We need to raise investment. If the EC does not give it, we should cut the corporation tax rate," he said.

Lee said the "crux" of his clash with Fine Gael finance spokesman Richard Bruton at a now infamous parliamentary party meeting days before the December budget was about his questioning of "aggressive" spending cuts.

He said support for cuts across the parties was stifling debate, while the country was "going down the tubes".

Lee said Greece and Ireland were the "canaries in a coal mine" for the single currency.

Ireland's role was to explain to the European Commission ways to make the project work, he said.

"As I see it is not about renegotiating the terms of the stability and growth pact. The EC policed it. They got it totally wrong," he said.

"If Fine Gael gets elected it is going to be the same policies. Richard Bruton is saying what the others are saying. The Labour Party does the same. Where is the debate? They are all afraid to stand up and they do not have the confidence," said Lee.