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No U-turn on Budget cuts, tax increases – Noonan

FINANCE Minister Michael Noonan says the current plans for tax hikes and spending cuts will continue – but any spare cash will be used to boost the economy.

Mr Noonan was speaking after comments from the European Commission president, Jose Manuel Barroso, who said austerity had reached its limits.

The EU's most senior official has given the strongest signal yet that the Europe-wide policy of spending cuts and tax hikes could be relaxed in an effort to kickstart economic growth.

The admission by Mr Barroso that austerity is not working has opened the possibility of quantitative easing – or printing hundreds of billions of euro.

But Mr Noonan indicated the Government was sticking to its target of reducing the budget deficit, even as the austerity policies come under greater scrutiny.

"We have laid out a programme for correction and we should stick to the programme and stick to the targets in the programme," he said.

Mr Noonan left open the possibility of investing in the economy to boost jobs and growth, but warned against a "spending spree".

"If there is spare cash around, we should use that money for investment purposes to grow the economy and get people back to work," he said.

His remarks were made as officials from the troika arrived in Ireland to begin their 10th review of Ireland's performance under the bailout deal.

Meanwhile, Public Expenditure Minister Brendan Howlin has become the latest to advocate a move away from austerity in Europe, but says Ireland must reduce its debt and "pay its way".

And he said there would be no let up in the planned level of cuts and taxes here, insisting "adherence to our budgetary targets remains as important as ever" if Ireland was to exit the bailout at the end of the year.

Exit

He added the decisions the Government would have to make this year "will be the final big push to secure the exit" from the bailout.

In his speech in Brussels, Mr Barroso said the EU should place a greater emphasis on policies that stimulate growth and less on so-called austerity measures such as cutting spending.

"While I think this policy is fundamentally right, I think it has reached its limits," he said.

"A policy, to be successful, not only has to be properly designed, it has to have the minimum of political and social support," Mr Barroso added.

Irish Independent