Fiscal Council would still like to see Budget adjustment of €3.1 billion

Wednesday 09 October 2013 18.17
Professor John McHale of the Irish Fiscal Advisory Council
Professor John McHale of the Irish Fiscal Advisory Council

The Irish Fiscal Advisory Council has distanced itself from comments by a Labour Party TD that it had agreed to a lower Budget adjustment of €2.5 billion.

On Prime Time last night, Labour's Arthur Spring said "in terms of how it is perceived the Irish Fiscal Advisory Council have said they are okay with it."

But in a statement today, the Council has repeated that its policy was for the Government to stick with the previously planned adjustment of €3.1 billion in next week's Budget.

Finance Minister Michael Noonan said yesterday the Budget would raise €2.5 billion in spending cuts and tax measures and not the projected €3.1 billion.

In its statement today, the Council said that it has endorsed the Department of Finance's economic projections for this year and next. It said that despite the smaller Budget adjustment, it has concluded that the macroeconomic forecasts remain "within the endorsable range".

The Department of Finance yesterday said that it expects the economy to grow by 1.8% next year. It said GNP will be 1% higher by the end of 2013 and 1.4% higher next year.

It also predicted that employment will grow by 1.6% this year and 1.4% in 2014, with unemployment dropping to 12.6% next year.

The Fiscal Council said that it is required under an amendment to the Fiscal Responsibility Act to endorse the macroeconomic forecasts underlying the Budget.

"It is not required to endorse the budgetary projections or the fiscal stance. However, under its statutory mandate it does assess the budgetary projections and the fiscal stance in its twice-yearly Fiscal Assessment Reports," the statement added.

"The Council would like to stress that its assessment of the appropriate fiscal stance is unchanged. It has previously publicly stated that the preferred policy is to continue with the previously planned aggregate adjustment of €3.1 billion in Budget 2014," the Council said.