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Budget 2016: Gov't fiscal advisors warn of past mistakes, say too expansionary

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Minister for Finance Michael Noonan and  Brendan Howlin Minister for Public Expenditure and Reform pictured with Sean O Rourke in the RTE Radio 1 Studio before going on air. Picture Credit: Frank Mc Grath

Minister for Finance Michael Noonan and Brendan Howlin Minister for Public Expenditure and Reform pictured with Sean O Rourke in the RTE Radio 1 Studio before going on air. Picture Credit: Frank Mc Grath

Chairman of the Irish Fiscal Advisory Council John McHale

Chairman of the Irish Fiscal Advisory Council John McHale

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Minister for Finance Michael Noonan and Brendan Howlin Minister for Public Expenditure and Reform pictured with Sean O Rourke in the RTE Radio 1 Studio before going on air. Picture Credit: Frank Mc Grath

Budget 2016 is too expansionary, the chairman of the Fiscal Advisory Council (FAC) has warned.

John McHale, a professor of economics at NUIG, said told RTE's Morning Ireland that the Budget would have to be reviewed carefully to see if it complies with the rules.

Budget 2016: Click here for full in-depth coverage of Budget 2016 on Independent.ie

Supplementary spending estimates related to the last Budget released at the weekend, allied with the Budget measures announced yesterday, brought the total giveaway to around €3bn, economists estimated.

"There are questions over fiscal compliance from a European and domestic perspective," he said.

"The spending this year looks like it's going to be €1.7 billion higher than was budgeted and about €1.4 billion of that is current spending. We did anticipate that there would be overruns in health, but we didn't see that other spending coming," he added.

It's unusual for the FAC - which usually publishes an analysis some weeks after the Budget -  to intervene this soon.

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Public Expenditure Minister Brendan Howlin on the steps of Government Buildings yesterday. Photo: Steve Humphreys

Public Expenditure Minister Brendan Howlin on the steps of Government Buildings yesterday. Photo: Steve Humphreys

Finance Minister Michael Noonan speaks at a press briefing in Government Buildings yesterday. Photo: Frank McGrath

Finance Minister Michael Noonan speaks at a press briefing in Government Buildings yesterday. Photo: Frank McGrath

Jobs Minister Richard Bruton

Jobs Minister Richard Bruton

Jobs Minister Richard Bruton and Employment Minister Ged Nash sign the Minimum Wage into law yesterday. Photo Sam Boal

Jobs Minister Richard Bruton and Employment Minister Ged Nash sign the Minimum Wage into law yesterday. Photo Sam Boal

Environment Minister Alan Kelly speaking at his Budget press briefing at Government Buildings. Photo: Steve Humphreys

Environment Minister Alan Kelly speaking at his Budget press briefing at Government Buildings. Photo: Steve Humphreys

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Click to view full size graphic

Click to view full size graphic

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Minister for Public Expenditure and Reform, Brendan Howlin, and Minister for Finance, Michael Noonan, deliver the Budget on the steps of Government Buildings

Minister for Public Expenditure and Reform, Brendan Howlin, and Minister for Finance, Michael Noonan, deliver the Budget on the steps of Government Buildings

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Meanwhile Finance Minister Michael Noonan told Newstalk that he didn't expect any pushback from Europe over the Budget.

Later he told RTE: "On the fiscal rules, we checked with the (European) Commission, we had ongoing talks with them. "We were told we would make the benchmarks. We're actually taking more out of the economy than we are taking in. "The definition of an expansionary budget is when you stimulate the demand side of the economy but we're taking out more than we are putting in."

He added that some economists would see that as contractionary.                                                

Tanaiste Joan Burton also defended the moves saying the budget deficit targets would be lower than expected and that debt profile was being reduced further.

Spain has already been told to rewrite its Budget and told to rein in spending.

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