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Spend, spend, spend

JUSTICE Minister Dermot Ahern has urged people to switch from saving to spending as the Government considers how to save €3bn this year.

The Justice Minister, who was speaking after a day-long Cabinet meeting at Farmleigh House, claimed that the economy had bottomed out.

The level of savings in the economy had grown from 4pc to 12pc and people must now be persuaded to start spending, he said.

"What we need to do as a nation is to get those people who are saving their money to spend their money in the economy."

He described the preservation of jobs and helping unemployed people to find work as a "core issue" for the Government.

"Obviously in the context of the tough exchequer situation we will be looking at areas where we can try and give people an added stimulus to get back into employment," he said.

A spokesman for Mr Ahern said he was merely reflecting the views of economists who had noted the increase in the saving rate -- and was not arguing for an economic stimulus package.

The Department of Finance has repeatedly said the State does not have the resources to afford an economic stimulus package such as the $787bn (€620bn) stimulus package announced by US President Barack Obama last year.

The Taoiseach, Brian Cowen, also spoke about the need to boost domestic spending, but did not indicate there would be any lowering of tax rates in the Budget.

Of the €3bn savings this year, €1bn will come from the capital programme. Mr Cowen suggested most of the remaining €2bn would not come from revenue-raising taxes.

"Predominantly we're looking at adjustments on the expenditure side," he said. "At the end of the day it will be a matter for the Minister for Finance to decide on any taxation matters."


"I think people increasingly are recognising that the confidence-building measures we are bringing forward, particularly in relation to rectifying the public finances, that's a crucial part of the recovery of the economy," Mr Cowen added.

The $40bn five-year capital spending programme was also on the Cabinet agenda.

It will be published on Monday with the Cabinet meeting that day to complete some minor details before it is published. It will contain approximately €1bn of spending cuts on planned infrastructure projects -- with the other €2bn coming from current spending cutbacks and increased taxation.