The Minister for Finance Charlie McCreevy has said that economic growth in 2003 and 2004 is likely to be less than the Department of Finance predicted earlier in the year.
The most recent Government predictions have assumed a growth rate of 5% in the next three years, but McCreevy said it was likely this would be revised downwards when he made his next set of projections on budget day.
While he refused to comment directly on reports that he was planning a further €800m in spending cuts, he said that the slowdown in growth and increasing tax shortfall did indicate a continuing deterioration in the Government's financial position.
The Minister indicated that he planned to take firm action in his December Budget, saying it must reflect the fact that we now had less tax revenue coming in.
He did not rule out the option of using the Central Bank's foreign currency reserves as a source of extra revenue. However he said this still required approval from the European Central Bank, which had prevented him from accessing the money last year. The Central Bank holds currency reserves of almost €6 billion, and commentators have argued that such large reserves are not needed now that the bank is no longer responsible for managing the exchange rate.
McCreevy refused to comment on whether he was planning a public sector recruitment freeze. On benchmarking he said that any settlement would be made as part of the negotiations of a new public sector wage agreement, and no individual group could expect to make its own separate settlement.
He said he was examining further measures to ensure that public spending delivered value for money, and said that Government departments would have to stick within the spending limits set in the Government estimates.
Despite the difficulties, the minister repeated his view that there is no crisis in the public finances, and that economically we are in a very strong position compared with many other European currencies.
