Business Irish

Saturday 20 September 2014

No need for new austerity measures in Budget, Goodbody Stockbrokers

Published 20/08/2014 | 08:19

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Finance Minister Michael Noonan will be keeping a close eye on the eurozone
Finance Minister Michael Noonan will be keeping a close eye on the eurozone

GOODBODY Stockbrokers has said the government will meet its deficit targets even if no new austerity measures are introduced in Budget 2015.

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The broker, which said the 3pc deficit target in 2015 can be reached, added that the Government now has an opportunity to use the Budget for growth enhancing measures when Finance Minister Michael Noonan introduces it next October.

The broker expects unemployment to fall to 10.7pc by the end of the year and 8.5pc in 2016.

It is also predicting GDP growth of 3.5pc per annum over the next three years.

"The Irish economic recovery has gained momentum over recent months, with a host of indicators suggesting that the recovery is gaining strength and becoming more broad based.," said Dermot O'Leary, Goodbody chief executive.

He added that the water charges that have already been announced will bring in €500m, leaving scope for the Government to focus on measures that improve medium-term growth capacity, including a reduction in the income tax burden and the reversal of some of the capital spending cuts of recent years.

"The fiscal position would also benefit from refinancing €20bn of IMF loans over the coming years, saving at about €340m per annum (0.2pc of GDP) in interest costs.

"The NTMA should do this by selling debt beyond the traditional 10 year time frame, taking advantage of record low market interest rates," it added.

 

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