Noonan stays firm on Budget plans despite ESRI forecast
Published 01/12/2011 | 05:00
FINANCE Minister Michael Noonan said he will not change planned cuts and spending in next week's Budget even after the ESRI slashed its growth forecast for next year.
He made the comments in Brussels at a meeting of the Ecofin group of European Union finance ministers.
Despite the crisis gripping Europe it was the Budget at home that dominated the minister's comments to reporters as he left Brussels yesterday.
Mr Noonan said he would not be changing his budget plans after an ESRI report said the economy would grow by just 0.9pc next year, not the 2.3pc it had previously forecast.
"The question is will this change the approach to the budget, because the ESRI is a state agency that we take a lot of notice of, but it won't," Mr Noonan said.
He said as well as cutting next year's growth forecast the ESRI had actually upped its estimate for growth in 2011 to 2pc.
It is predicting this year's budget deficit to be 8.3pc, which is below the 8.6pc target under the bailout deal, he said.
"So taking their full report into account we don't have to make any adjustment in our budgetary strategy," he said.
He said policy makers were faced with fast-changing economic estimates.
"The economy is in a period of great volatility, forecasts are moving up and down," he said. Despite that, he said the Government thought its projections remained on "pretty solid ground".
The Ecofin session had focused on finding ways to resolve the European debt crisis.
Ministers did sign off on loan payouts to Greece and Ireland under the bailouts, and agreed to changes to the European bailout fund that are aimed at boosting its effectiveness to contain panics in the markets.
Mr Noonan said officials would assess whether the changes meant it could be worth asking the bailout fund to buy Irish government debt in the markets.
"We need to measure if it would play to our advantage," he said.
The session will focus on agreeing to changes in the Lisbon Treaty that Germany and the Netherlands are demanding as the price for backing rescue plans.
Mr Noonan left Brussels early to return to Dublin, but not before fellow ministers had signed off on an €8.5bn loan payment to Ireland that will be paid out in January.
It is the second time Mr Noonan has left an Ecofin meeting early in recent weeks.
Officials said it reflects his pre-Budget focus; it is not a sign that Ireland is less engaged in the talks on wider eurozone reform than others, they said.
Despite the turmoil in the markets, Mr Noonan said the Brussels talks had been a good couple of days for Ireland.
Ministers had signed off on next month's bailout payment and the country was widely commended for its progress, he said.