Monday 23 October 2017

OECD warns we will fall short of EU budget target

"Those who were better off actually bore a larger share of the hit" - Istvan Szekely, European Commission

Colm Kelpie and  Donal O'Donovan

IRELAND will miss EU targets to slash the Budget deficit to 3pc by 2015, in a warning contained in a report from influential think tank the OECD.

The Paris-based Organisation for Economic Co-operation and Development (OECD) is forecasting that Ireland will fall just short of the target to get the deficit to less than 3pc by 2015.

It also urged the Government to do more to get the long-term unemployed back to work, particularly jobless construction workers.

The OECD forecast contrasts with the Government here, which predicts that the deficit will be 2.9pc in 2015, better than the target level.

Last night, the Department of Finance said it was sticking to its own forecast.

But in a new report the OECD said the shortfall in public spending will be 3.1pc of the value of the economy in 2015, missing the target by a whisper.

And it could be worse if growth in the economy does not pan out as expected, the report warned. OECD economist Alberto Gonzalez Pandiella told the Irish Independent that the lack of growth, globally and at home, was the big issue facing Ireland.

He said: "Ireland remains a very open economy – so if growth in trading partners is weaker than anticipated, that would translate into lower growth for Ireland and translate into some impact on the deficit figures.

CHALLENGE

"The deficit would be higher than currently projected." In its latest global economic outlook, the OECD said Ireland's economy would grow by 0.1pc this year, strengthening to 1.9pc next year and 2.2pc in 2015.

This is broadly in line with the projections from the Department of Finance.

Mr Gonzalez Pandiella added that long-term unemployment was the big challenge facing the Government

"The big concern as we see it is long-term unemployment and we see this as one of the fundamental challenges for Ireland and should be one of the main policy priorities," he said.

The OECD also said that getting the long-term unemployed back to work should be the priority. Construction workers should be especially encouraged to learn "the skills and competencies demanded by job-creating sectors", it urged.

The Department of Social Protection said the Live Register fell below 400,000 in October for the first time in more than four years – evidence the economy was recovering and the Pathways to Work strategy was succeeding.

"Under Pathways, jobseekers no longer receive just income supports from the Department, but also work, training and education supports. The department will spend more than €1bn on such employment supports next year, and a range of schemes are in place to assist jobseekers and employers alike, such as JobsPlus, which helps businesses with the costs of hiring new people," a spokesman said.

Irish Independent

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