Resist temptation of injecting €1bn into the economy, Government told

CASH-STRAPPED workers and families can expect no respite in the forthcoming Budget after the Central Bank warned the Government not to ease up on austerity.

Some €3.1billion in tax hikes and spending cuts are due to be announced in the Budget on October 15.

The Coalition is in a battle with the Troika to reduce the burden on taxpayers by securing permission to spend some of the €1billion in savings from the promissory note deal.

However, poor growth figures released yesterday led the Central Bank to urge the Government not to use the cash as a stimulus ahead of the country’s expected bail- out exit at the end of the year. Despite the austere advice, Michael Noonan yesterday expressed optimism about the current economic position. However, the Finance Minister would not be drawn on how harsh the adjustment will be.

The Central Bank’s third quarterly bulletin of the year stated: ‘Looking ahead; there has been discussion of scaling back the fiscal consolidation effort in 2014-15 on the basis of the interest savings from the promissory note transaction. However, while recognising that some difficult decisions will still have to be made, Central Bank management remain of the view that this temptation should be resisted.’

The Central Bank has revised downwards its projection for gross domestic product growth from 1.2 per cent to 0.7 per cent due to poor export and spending figures.

Mr Noonan took a less pessimistic view of the country’s economic recovery.

He said the money flowing into the Exchequer is expected to be strong towards the end of the year and said it is this revenue and growth estimates on which the Budget will be framed. He added that with Germany, the US and the UK growing their economy, ‘we’re reasonably well-positioned for next year’.

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