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Noonan: Economy will grow even more than we thought this year - but austerity isn't over

There’s more positive economic news out today.

Image: Sam Boal/Photocall Ireland

Updated at 6.35pm

MICHAEL NOONAN HAS said the government now expects the economy to grow even more than was previously thought this year, but has warned that austerity isn’t over.

The Finance Minister was responding to the latest CSO figures which show the economy grew by 1.5 per cent in the second quarter of this year.

Ireland’s gross domestic product (GDP) is now up 7.7 per cent in the year to the end of June with gross national product (GNP) up 9 per cent.

Noonan said the expected 3 per cent growth in the economy this year could now actually be 4.5 per cent though he cautioned “we haven’t the numbers run yet”.

“My people advising me tell me it’s a trend that will continue so we’ll be marking up the growth figures for 2014 and 2015,” Noonan told reporters at Government Buildings this morning.

He said it is now expected that the deficit will come in “well below” 4 per cent of GDP at the end of this year meaning a “short journey” to get it below 3 per cent of GDP by 2015 as required under EU rules.

Noonan continued: “The figures are due to the policies pursued by government over the last three years and the sacrifices made by the Irish people. It shows that sticking to the policies is now bearing fruit and it’s a very good result.”

He said he hopes the economy can grow by 3 per cent every year over the next five years and possibly ten years as he looks to move the country away from ‘boom and bust’.

However, Noonan declined to state that country had reached the end of austerity, warning that there is still a huge debt burden that amounts to 123 per cent of GDP – the third highest in the EU.

“We must remember that there are a lot of legacies and bad legacies after the recession period we’ve gone through.

“We have 11.2 per cent of our people are unemployed. Now that’s lower than the EU average and it’s way better than where it was when we came into government at 15.2 [per cent]. But we need to get that down,” he said.

Noonan also denied that there is “a clamour for a giveaway budget” insisting that the priority of government is to “sustain the recovery and turn the recovery into jobs”.

He said the Budget will be designed with the two objectives of creating employment and getting emigrants “back into the country”.

Noonan added that while there is still a requirement to achieve €2.1 billion in savings in Budget 2015 there is enough tax take to ensure there will not be a need to cut expenditure or increase taxes and agreed the Budget on 14 October will be broadly neutral.

Speaking at a separate event in Dublin today, Taoiseach Enda Kenny said that while today’s figures from the CSO were strong, the Government wouldn’t be getting carried away.

We have a big job of work ahead of us. We intend to build and strengthen the economy for the future.

Source: Sasko Lazarov/Photocall Ireland

Asked about specific Budget measures, the Taoiseach reiterated the pledge outlined in this summer’s statement of priorities by the coalition to ease the burden on tax-payers over the next number of years.

“What we did say in respect of the Budget was that the tax burden of 52 per cent is too heavy in respect of middle and lower income workers — and that starting in this Budget we would begin to reduce that burden over the next number of Budgets,” Kenny said.

So what people can expect is that the decisions that the Government will make here will be to strengthen and fortify the progress that we have made in the past period and not to waste it.

Additional reporting, Daragh Brophy.

Read: Here’s how Michael Noonan wants to end ‘boom and bust’ economics

Read: ‘I wouldn’t dare do such a thing’: After Enda’s scolding, Leo isn’t talking about the Budget this week

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Hugh O'Connell

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