Business Irish

Tuesday 22 October 2019

European Commission: Anglo cost and Croke Park II rejection threaten Budget

Commissioner Olli Rehn
Commissioner Olli Rehn

Colm Kelpie

THE cost of liquidating the former Anglo Irish Bank and the rejection of Croke Park II are among the risks to this year’s Budget, the European Commission has warned.

In its spring forecast, the Commission said Ireland’s fiscal performance so far this year is on track.

It said unemployment is set to be lower than in earlier projections, but this is mainly on account of stronger than expected emigration.

“While unemployment fell to 14pc in February, according to the monthly Live Register, the trend continues to be driven more by a shrinking labour force than by major employment creation,” the Commission said.

Ireland’s debt to GDP ratio is expected to peak this year at 123pc, and decline thereafter.

The deficit will be 7.5pc of gross domestic product this year, raising a February forecast of 7.3pc.

The Commission raised the forecast partly because of the higher-than-expected costs of liquidating the Irish Bank Resolution Corporation.

The deficit will narrow to 4.3pc next year as the Government pushes on with austerity measures, the Commission said.

Annual GDP growth this year is now forecast at -0.1pc in the EU and at -0.4pc in the euro area.

For 2014, economic activity is projected to expand by 1.4pc in the EU and 1.2 pc in the euro area.

Olli Rehn, Commission Vice-President for Economic and Monetary Affairs, said we must do whatever it takes to overcome the unemployment crisis in Europe.

“The EU’s policy mix is focused on sustainable growth and job creation,” he said.

“Fiscal consolidation is continuing, but its pace is slowing down. In parallel, structural reforms must be intensified to unlock growth in Europe."

End.

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