Tuesday 27 September 2016

'Leprechaun economics' will not impact on Budget, says Noonan

Published 14/07/2016 | 02:30

Public Expenditure Minister Paschal Donohoe and Finance Minister Michael Noonan at the launch of the Mid-Year Expenditure Report yesterday Photo: Tony Gavin
Public Expenditure Minister Paschal Donohoe and Finance Minister Michael Noonan at the launch of the Mid-Year Expenditure Report yesterday Photo: Tony Gavin

The extraordinary figures showing Ireland's growth rate at 26pc will have absolutely no impact on the upcoming Budget, Finance Minister Michael Noonan has said.

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He has dismissed the idea that 'leprechaun economics' could damage Ireland's reputation overseas, saying various agencies will be briefing international counterparts about how the figure was reached.

The minister said growth rates were calculated in "exactly the same way" all over Europe and the Central Statistics Office (CSO) was looking at the situation in "a rear-view mirror".

"It's not that the CSO made an error, but if I were to base my policy decision on that kind of growth rate, then we would make an error.

"The best data flow to allow us to make policy is the number of jobs created and the amount of revenue coming in on a month-by-month basis," Mr Noonan said. "We're not making any decisions on the economy growing at 26pc, we're making decisions on the economy growing at 5pc."

He was speaking alongside Public Expenditure Minister Paschal Donohoe at the launch of the Government's Mid-Year Expenditure Report.

It shows that the Department of Finance is sticking to its predication that there will be around €1bn for tax cuts and spending increases in October's Budget.

Of this, €600m will be used to increase spending and €330m for reducing taxes, including the Universal Social Charge.

Once pre-existing spending commitments and demographic pressures are factored in, the total budget package for next year will be €2bn higher.

Mr Donohoe said the total spent by the Government next year would be €57.6bn, of which €53.2bn would be used for day-to-day public services.

This means that spending on these items will be just €200m shy of the record set during the Celtic Tiger days in 2008.

However, Mr Donohoe said this was not a measure of success unless there were "better outcomes".

"If we combine new politics with old habits, we're going to end up with bad budgets," he said.

The ministers faced a series of questions about the growth rate which have made international headlines. In response, Mr Noonan said: "You get headlines every day of the week. I don't control the headlines, neither do I have any input in CSO figures. The NTMA are very effective in putting out the real facts."

He insisted there were "quirks in national statistics in every country", and added: "There's no one trying to hide anything."

The Finance Minister noted that about 80pc of all aircraft are now leased out of Dublin, but while this affects growth rates, it does not provide a massive benefit to the real economy.

"There is some kick on of economic activity in accountancy firms and legal firms (but) the proportion of the impact would be quiet small," he said.

Irish Independent

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