THE European Commission's ruling last week on how money injected into Anglo Irish Bank should be treated in the national accounts will not result in even harsher budget measures and will not increase the cost of borrowing for the Irish state, finance minister Brian Lenihan has said.

Lenihan said the opposition claims to this effect were "simply incorrect".

The commission ruled last week that the €4bn pumped in to prop up Anglo Irish Bank must be included in calculations of the budget deficit.

With Anglo set to potentially absorb another €18bn of state money, the ruling prompted claims that the government will have to find further cuts and savings if it is to meet its target of reducing the deficit to 3% of GDP by 2014.

However, Lenihan said the budgetary plan laid out by the government remains on target and would not be affected by what was a "technical, accounting" reclassification. He said the NTMA, the state agency that manages Ireland's debt, had fully alerted the markets about the situation in advance.

While the situation in Greece had caused interest-rate spreads to rise across the whole Euro region, the rate at which Ireland borrows had fallen below Portugal in recent days.

The finance minister said he had "no problem" with Fianna Fáil TD Sean Fleming expressing a view last week that Anglo Irish Bank should be wound down. It was clear, and "Sean accepts the point", he said, that there couldn't be an immediate wind-up of Anglo.

He said the question of whether the bank would be "worked out" over time or would go with management's proposal of continuing with a good bank would be decid­ed after "very careful evaluation" based on what is best for the taxpayer.

Responding to a report yesterday that he approved the retirement deal for Bank of Ireland's Richie Boucher, Lenihan said he approved Boucher's salary and retirement age but not the "amount required to fund it [the pension arrangement]" as that was "an actuarial calculation". He also said Boucher's salary was much lower than that of his predecessor. He added: "Clearly if a similar exercise was done on public sector pensions, very large sums would be required to be paid to fund them."

Lenihan said there was no question of the state leaning on Bank of Ireland to abandon the top-up. It was a decision made by the bank, which was anxious about the impact on pension reforms and on the Croke Park agreement.