Irish Budget Deficit Likely To Top 1 Billion Euros, Reports Suggest

by Robert Lee, Tax-News.com, London

07 June 2002

Irish Exchequer returns to the end of May have revealed that government spending is now running at far above the projected level, according to a report in the Irish Independent on Thursday.

Echoing predictions made by economists earlier this year, the newspaper suggested that if the spending trend continues unabated, the recently re-elected Fianna Fail-Progressive Democrat coalition could face a year-end budget deficit of over 1 billion euros.

Speaking to the Independent yesterday, IIB Bank Economist, Austin Hughes warned that the government's grim financial situation is likely to be exacerbated by the forthcoming phased benchmarking of the public sector pay purse. This process is expected to add around 300 million euros to Exchequer outgoings in the current financial year, with more expense to follow in 2003.

Mr Hughes suggested that following warnings from outside agencies such as the OECD, and also from the Republic's business community over runaway spending levels, the Government and the Department of Finance in particular will need to rein their expenditure in tightly, in order to bring the situation under some semblance of control.

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