The Minister for Finance has said that expectations will have to be adjusted to reflect the more uncertain economic climate. Charlie McCreevy was commenting on the publication of the Department of Finance's Economic Review and Outlook 2001. This report confirms that the budget surplus will be £500m less than had been anticipated and will come in below £2bn.
In light of this shortfall, the report says that aspirations for further increases in tax relief and increases in public spending will have to be modified to a level consistent with the pace of slower growth.
The report says that improving the country's infrastructure in order to stop congestion is a main priority. It also warns that the fall in the dollar and sterling would hurt Ireland's competitiveness and Ireland should guard against excessive wage inflation. It calls for future tax policy to focus on measures such as getting more people into the workforce.
This echoes comments made earlier today by the Tánaiste, who said that any tax changes in the December budget must bear in mind the overall economic situation. Mary Harney has been visiting Macroom, County Cork to discuss finding a replacement industry for the GSI computer plant, which is closing with the loss of 670 jobs.
Ms Harney said that the priority with any future tax cuts was very low income groups. She said that anyone earning below the minimum wage of £4.70 an hour should not have to pay tax. She added that there was still more to be done for bottom and middle income earners.
Speaking on RTÉ's News At One, she said that Ireland still had the best performing economy in Europe. However, she admitted that the effects of the downturn in the global economy would be felt.
