Thursday 8 December 2016

FG promise to cut jobless rate to 6pc and return public finances surplus

Fionnán Sheahan, Colm Kelpie and Niall O'Connor

Published 17/09/2015 | 02:30

Taoiseach Enda Kenny talking to Martin Naughton from Dublin who was protesting outside Leinster House yesterday. The protest was in aid of people with disabilities and was organised by the AT Network. It has criticised spending cuts made by the government to services in recent years
Taoiseach Enda Kenny talking to Martin Naughton from Dublin who was protesting outside Leinster House yesterday. The protest was in aid of people with disabilities and was organised by the AT Network. It has criticised spending cuts made by the government to services in recent years

Taoiseach Enda Kenny will tonight pledge to bring unemployment down to 6pc over the lifetime of the next government.

  • Go To

Setting out parts of the Fine Gael manifesto for the General Election, Mr Kenny will also commit to return a surplus in the public finances over the next five years.

He is to say Fine Gael will publish a fully-costed five-year economic plan ahead of the election.

His speech to the business group IBEC tonight indicates Fine Gael will put it up to the other parties to clearly set out their stalls in the campaign.

Mr Kenny will say the Fine Gael plan will be centred on three steps:

Additional measures to replace all the jobs lost during the recession and reduce unemployment to 6pc.

Making work pay through a combination of cuts in the rate of tax on work, better and more affordable childcare and a higher minimum wage.

And restraint in public spending growth to return the public finances to surplus, and to guard against repeating the mistakes of the past.

Mr Kenny will say: "After a lost decade of economic hardship, a new more sustainable period of prosperity is now within our grasp.

"But Irish families know that the recovery is fragile and incomplete. All remain nervous about the risks ahead and the danger of slipping back.

"They want and deserve a solid foundation on which to plan our futures. Our plan will offer that foundation."

Meanwhile, ratings agency Moody's has said that the Government should focus on slashing debt further, rather than indulging in Budget giveaways.

Just days after the agency failed to upgrade Ireland's rating into the 'A' bracket, a senior analyst at Moody's cautioned that there was no need for an expansionary Budget.

The agency has listed the Government's plan to ease up in the Budget, and the uncertainty posed by next year's election, among its reasons for not upgrading Ireland to an 'A' rating.

Moody's analyst Kathrin Muehlbronner said the economy did not need stimulus and said any extra revenue should be used to pay down debt.

"The Irish economy is in a very sweet spot right now. If you have a very open, volatile economy, you should have bigger buffers if you want to shield yourself. Higher buffers equal lower debt," she said.

But Tánaiste Joan Burton reiterated the Government's pledge that next month's Budget would be "sensible".

The Government is planning to slash taxes and hike spending in a package worth between €1.2bn and €1.5bn.

But Ms Burton ruled out any notion of a giveaway Budget.

"All of the figures indicate to date that the parameters we set out in the spring are very sensible and we should be able to achieve them.

Michael Noonan has indicated they will be to the upper end towards the €1.5bn," she said.

In a note to investors in the wake of its rating decision, Moody's noted that the Government's budget plan might not comply with EU budgetary rules - a view once shared by the Fiscal Advisory Council, the State's budgetary watchdog.

In June, the watchdog argued that the Budget plan risked non-compliance. But it has now softened its stance, saying it just might meet the tough EU rules, thanks to the faster-than-expected recovery.

"Even based on the revisions to the national accounts data by the CSO, when you recalculate the numbers, it gets them most of the way there, even with a €1.2bn adjustment," Council chair Professor John McHale told the Irish Independent.

"We won't know for definite if the €1.2bn-€1.5bn would be consistent with full rule compliance until we see the budgetary forecast, but I think it's looking more likely now than it was that they could be in compliance with the rules."

This comes just a day after the head of the OECD said the budget plan was "prudently" expansionary but warned that high childcare costs needed to be tackled and rapidly rising property prices were a risk to the recovery.

The Fiscal Council said that improvements in the economy and public finances meant the Government was likely to comfortably succeed in reducing the deficit to below the 3pc ceiling this year.

The Government is expecting the figure to come in ultimately at around 1.5pc.

Irish Independent

Read More

Promoted articles

Editors Choice

Also in Business