Wednesday 28 June 2017

Editorial: Caution still needed as unemployment drops

Finance Minister Michael Noonan is known for being cautious
Finance Minister Michael Noonan is known for being cautious
Editorial

Editorial

With the level of unemployment now projected to fall back to 10pc over the next two years we are, thankfully, seeing the Irish economy return to a level of normality not seen since before the crash of 2009. At that time, some commentators were accused of "talking down the economy" and the real danger now, as things improve, is that some might "talk up the economy".

It is estimated that each 1pc fall in unemployment is worth €200m to the Exchequer in declining social welfare payments and higher taxes recouped from the gainfully employed. In some ways the jockeying for position has already commenced with the general secretary of the Irish Congress of Trade Unions, David Begg, insisting that pay rises are now needed to compensate workers for years of austerity, tax increases, pay cuts and new household charges. Nor will this improved financial situation be lost on the many special interests groups, quick to demand a slice of any increased tax revenue.

On the other side of this equation, politicians, particularly in the Fine Gael part of the Government, are seeking tax cuts as a way of softening their image after a series of austerity budgets. Already Finance Minister Michael Noonan is playing down any talk of a "giveaway" Budget in 2014. But there is little doubt he will come under pressure to deliver something to his beleaguered backbenchers.

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