Deficit beats Troika target as Noonan vows to stay course
THE Government will beat the deficit target set by the troika for this year, Finance Minister Michael Noonan confirmed.
This year's deficit will be 8.2pc of gross domestic product, which is well below the 8.6pc target set by the troika.
Mr Noonan reiterated that the deficit for the next few years will be in line with projections, forecasting a deficit of 7.5pc next year, followed by 5.1pc in 2014 and 2.9pc in 2015.
The deficit projections are based on economic growth of 1.5pc in 2013, rising to 2.5pc in 2014 and 2.9pc in 2015.
Turning to future Budgets, Mr Noonan said he expects cuts and savings of €3.1bn for 2014 and €2bn in 2015 – although taxes are only expected to rise by €500m next year, a third of the hike seen in this Budget.
"Signalling future tax-raising measures brings an element of predictability during a period of uncertainty," said Kevin McLoughlin, head of tax at Ernst & Young in Dublin.
European Commissioner Olli Rehn was among the first to praise the Budget while going out of his way to say that he had not yet studied the detail – because the details had only been submitted to Brussels.
"We welcome Ireland's reaffirmed commitment to reducing the deficit to 7.5pc of gross domestic product in 2013 and to below 3pc of GDP by 2015," Mr Rehn said.
Owen Callan, a strategist at Danske Bank Markets in Dublin, said markets would probably welcome the Budget.
"Overall, the markets should be impressed to see the Irish Government remaining so firmly committed to the troika programme, continuing to adopt measures that, while politically divisive and socially unpopular, many other countries have thus far refused to countenance," he said.
"That there has not been a total collapse in economic activity during this period is testament to the strength and flexibility inherent within the Irish economy," he added.
Irish Independent Supplement