Noonan hints at austerity softening

Despite warnings from the Central Bank not to ease off on austerity, Mr Noonan followed up a report on strong Exchequer returns with a hint that the October 15 adjustment may be less harsh than anticipated.

The Government has been buoyed by an increase in tax this year, a fall in spending and steady drops inunemployment, with emigration playing a key part.

“We think we can do it somewhat less than the €3.1 billion, but we still have a lot of number crunching to do to see where we come in,” he said.

The Central Bank warned the Government that any let up in austerity risked Ireland’s hopes of exiting the bailout.

But Mr Noonan said getting the deficit down to at least 5.1% next year remained a priority.

In its latest quarterly bulletin, the bank cut its previous economic growth forecasts – 0.5% this year for all goods and services, including multinationals as measured under gross domestic product.

That was down 0.2% on the original estimate.

It also cut its projections for the Irish-owned sector of the economy, gross national product, down to 0.1% and 1.2% next year.

“No easing off in adjustment,” was the message from the bank ahead of the October 15 budget.

Amid planning for Budget 2014, official Exchequer figures showed the tax take to the end of September was up €768 million to €26.9 billion, while spending had been cut by €1.6 billion to €31.6 billion.

Some of the most significant improvements were in VAT, up 3.9%, and corporation tax, up 7.1% on the year.

But the VAT take for the year was running 2% behind schedule despite a boost from new car sales.

Mr Noonan described the figures as “pretty good”.

“The first thing to note is that the anxiety coming out of August has now disappeared,” he said. Source: The Irish Independent