Employers' group IBEC has warned the Government against going further than taking €3.6 billion of measures to cut the deficit in the forthcoming Budget.
At a meeting today, the group told Finance Minister Michael Noonan and Public Expenditure & Reform Minister Brendan Howlin that €3.6 billion would be enough to meet the 8.6% of GDP target set out under the EU/IMF programme.
IBEC director general Danny McCoy said an adjustment larger than €3.6 billion risked further damaging the fragile domestic economy. IBEC also urged the Government to focus on spending cuts, not tax rises.
IBEC said its latest economic forecasts supported its analysis. It expects GDP to grow by 1.4% this year and 2.4% next year. It forecast that the economy would still grow in the second half of this year, with strong exports offsetting the effects of weaker global conditions.
The group says Ireland remains on target to outperform many of its trading partners next year, with exports again growing and companies also beginning to invest more in equipment and machinery.
Use assets sale cash to cut debt - Fitzgerald
Professor John Fitzgerald of the Economic & Social Research Institute has advocated using the proceeds of sales of state assets for paying down debt rather than investing it in job creation.
Speaking at the Oireachtas Finance Committee, Professor Fitzgerald said using state funds to create jobs was expensive and the value for money was poor.
He said we should postpone decisions on how much to cut in the Budget until closer to the time, saying somewhere between €3.6 billion and €4 billion should be enough.
On the issue of front-loading, he said there was a very delicate balance to be struck, but after applying all the austerity the Government did not want to be in a position where it had to go back for more. Professor Fitzgerald said the bigger the surplus in the 2015-20 period, the bigger the recovery.
Professor Fitzgerald said the prospects of growth in the medium-term were reasonable and predicted some recovery in the jobs market in the next two years, "assuming Europe sorts itself out".
