Sunday 25 September 2016

We've consigned boom and bust to the history books, Noonan claims

Published 14/10/2015 | 02:30

Finance Minister Michael Noonan speaks at a press briefing in Government Buildings yesterday. Photo: Frank McGrath
Finance Minister Michael Noonan speaks at a press briefing in Government Buildings yesterday. Photo: Frank McGrath

Ireland's debt pile will fall to around the eurozone average by the end of next year, Finance Minister Michael Noonan said.

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In a speech designed to portray the Government as the true guardians of the economic recovery just months from the General Election, Mr Noonan said the Coalition had consigned to the history books the era of boom and bust.

The economy, he said, had been "transformed".

Growth of 6.2pc will be recorded this year - the fastest in Europe for a second year running - and 4.3pc in 2016, he said.

GDP is expected to average around 3pc in the following years.

Public debt is expected to fall to about 93pc of the value of the economy next year, around the eurozone average, the minister said, and drop to below 80pc by 2021.

"The last few budgets have been hard, but they made it possible for Ireland to exit the bailout, reduce our debts and move into a real recovery," the minister said.

"This Government has consigned to the history books the days of boom and bust, and the attitude of 'if I have it, I'll spend it'."

In a pre-election footing, the minister warned that the Government would not "gamble with the future", and said it wouldn't take "chances that destabilise the recovery".

The deficit this year is expected to be 2.1pc, well ahead of the original 2.7pc target, falling to 1.2pc at the end of next year.

The structural balance - which represents what Government revenues and expenditure would be if output were at its potential level - will be reduced by 0.8pc of GDP next year. This is ahead of the 0.6pc requirement under EU rules.

"The benefits of this Government's approach to managing the public finances can be seen in expenditure and revenue trends," Mr Noonan said.

"Between the end of 2014 and the end of 2016, my Department is forecasting that the economy will grow by 18pc in nominal terms with revenue from taxation and PRSI increasing by just under €7.2bn or 14.7pc while gross voted expenditure will increase by €2.25bn, or 4.2pc.

"This sustained difference between our revenue and expenditure growth rates is why we will reduce the deficit from 3.9pc of GDP in 2014 to 2.1pc in 2015 and to 1.2pc next year.

"Against this background, talk of an excessively expansionary Budget is well off the mark."

Mr Noonan said the Government had also made significant progress in reducing both the size and cost of servicing the national debt.

He said specific initiatives such as the Promissory Note transaction, the extension of maturities on the State's European loans and the early repayment of the International Monetary Fund (IMF) loans have also resulted in substantial savings to the taxpayer.

Mr Noonan said the debt forecast does not take account of the value of the State's shareholdings in AIB, Bank of Ireland and PTSB.

"These shares are now valuable assets belonging to the taxpayer and I remain confident, based on the best advice available to me at this time, that we will recoup the investment made in these institutions," he said.

Mr Noonan said 130,000 more people are now in work than in 2012 and this growth in employment is spread across the vast majority of sectors.

He said the 53,000 new jobs forecasted to be created this year will bring the number in employment close to 1.97 million people by the end of the year.

The Department of Finance is also forecasting that 48,000 jobs will be created next year, bringing the total number of people in work to just over two million.

Irish Independent

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