THE DÁIL IS TO BEGIN DEBATING the economic situation today as the government proposes to cut €15bn over the next four years in a bid to bring Ireland’s deficit in line with EU targets.
The €15bn target is double the government’s previous worst case scenario figure.
Yesterday, Minister for Finance Brian Lenihan said that “significant frontloading will be required”, meaning that the first of the four years will see the biggest cuts.
A government statement on the four-year plan said measures being introduced are likely to affect people’s living standards, but they could no longer be delayed:
The Government realises that the expenditure adjustments and revenue raising measures that must now be introduced will have an impact on the living standards of citizens. But it is neither credible nor realistic to delay these measures.
To do so would further undermine confidence in our ability to meet our obligations and responsibilities and delay a return to sustainable growth and full employment in our economy.
The Irish Times reports that Lenihan refused the ICTU’s argument that a longer time frame is required for the fiscal adjustment, saying: “The core issue here is there’s a fiscal gap of €19bn between what the state receives and what the state spends”.
The Irish Times reports that Fine Gael’s Michael Noonan said Lenihan has “deferred conversation” about the extent of this year’s frontloading, although Lenihan indicated that public servants may be expected to take further cuts:
I do think the ambition of the Croke Park agreement will have to be broadened and deepened in relation to the savings that can be secured by it.
Labour’s Joan Burton suggested that the European Commission has a new policy of taking “a closer interest” in how member states prepare their budgets as Commissioner for Economic and Monetary Policy Olli Rehn plans to visit Ireland in November.
Meeting the 3% target
The €15bn plan may not be enough to steer Ireland towards its 3% deficit target, the Irish Independent warns.
Yesterday, Davy Research released figures for its 2011 estimate which suggest that GNP would grow by 1.2% and GDP by 1.9% next year, meaning another €2bn could be added to Ireland’s deficit:GDP ratio, according to the Irish Independent.
The Dáil will begin its two-day debate on the economy today, RTÉ reports.
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