Michael Noonan: Budget 2014 will be 'tough'
Published 26/07/2013 | 12:22
Finance Minister Michael Noonan said today that Budget 2014 will be tough, despite some flexibility.
Mr Noonan was speaking in Limerick after the Central Bankwarned against easing off on austerity in its latest quarterly bulletin.
"The next budget is going to be tough," he said although there is a little "flexibility."
The Central Bank warned today that despite temptations to do so, the planned extraction of €5.1bn from the economy in budgets 2014 and 2015 needs to be adhered to if we are to maintain the confidence of international investors.
Sticking to the targets will also help build up a buffer against potential shocks - both of which are necessary if we are to successfully exit the EU/IMF/ECB bailout programme.
Improving competitiveness will also help boost Ireland's growth potential, it added.
The bank has revised down its growth forecasts for the economy.
It is expecting gross domestic product growth of 0.7pc for 2013 with a modest pick-up to 2.1pc in 2014.
The Central Bank said weakness in the economy in the first three months of the year was broad-based.
Exports fell sharply hit by a combination of weakness in markets like Europe as well as structural issues related to patent expiry in the pharmaceutical sector.
"Both are likely to constrain the pace of recovery in the economy for the remainder of the year," the report stated.
On a more positive note, recent data pointed to a gradual pick-up in employment, the bulletin said.
Exchequer figures for the first half of the year show that the 2013 general government debt target of 7.5pc is on course to be met, despite the general sluggishness of the economy.
But concerns over asset quality in the banks and their profitability continue to hinder the system as well as mortgage arrears.