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Tougher Budget on way as growth stalls

A tougher Budget is on the cards as the Government prepares to finally cut its predictions for growth in the economy for next year.

The lower growth rate could result in up to €200m more cuts and taxes being needed in Budget 2013.

The Department of Finance will formally announce a cut in the growth rate on Monday when its new economic outlook is published.

The 2013 growth rate will come down from the previously projected 2.2pc to 1.5pc.

The new rate is in line with what is predicted by the IMF and the Central Bank.

As a result of the lower growth, the tax take next year will be about €200m lower than was previously expected.

The Government is planning a package of €3.5bn next year to reach the 7.5pc deficit target agreed with the bailout team.

The latest Exchequer figures show tax revenues are marginally ahead of target but pressures remain on the spending side. The Government is on schedule to meet targets set out by the bailout team with tax revenues at the end of October at €28.4bn, €1.7bn ahead of the same period last year.

According to the latest Exchequer returns, revenues are up 4.3pc compared with last year on an adjusted basis.

Deficit

VAT is now €106m ahead of target cumulatively, while income tax was €26m ahead of profile. Corporation tax in October was down €225m.

Excise duties came in below target for the fourth consecutive month in October.

Despite the tax take being ahead of target so far this year, there are pressure points in the Departments of Health and Social Welfare.

The Exchequer deficit at the end October 2012 was €14bn, compared with €22.1bn in the same period last year.

Irish Independent