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Call to ease austerity in next Budget

Stockbrokers Goodbody has said the government will meet its crucial EU targets even if no new austerity measures are introduced in Budget 2015.

The broker, which said the 3pc deficit target in 2015 can be reached, added that the Government now has an opportunity to use the Budget for growth-enhancing measures when Finance Minister Michael Noonan introduces it next October.

The broker expects unemployment to fall to 10.7pc by the end of the year and 8.5pc in 2016.

It is also predicting GDP growth of 3.5pc per annum over the next three years.

"The Irish economic recovery has gained momentum over recent months, with a host of indicators suggesting that the recovery is gaining strength and becoming more broad based," said Dermot O'Leary, Goodbody economist.

He added that the water charges that have already been announced will bring in €500m, leaving scope for the Government to focus on measures that improve medium-term growth capacity, including a reduction in the income tax burden and the reversal of some of the capital spending cuts of recent years.

It revised its growth estimates for a hike in GDP to 3.5pc per year over the next three years.

Goodbody said a host of indicators are showing that the recovery is strengthening.

"The Irish economy is now in the middle of a cyclical recovery that is being led by strong growth in investment spending," Mr O'Leary said.

"This rate of expansion and the momentum seen in PMI surveys through the first quarter have surprised."

This means the Government could do considerably less in the Budget, it said.