| Curtail growth in public spending and don’t increase taxes |
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| Ireland's leading financial sector economists are calling on Minister for Finance, Charlie McCreevy to bring current public spending levels under control in order to avoid a budget deficit and stay within the terms of the budgetary provisions of the EU Growth and Stability Pact in the annual Finance pre-budget survey. |
Unlike last year, when the ‘skills tax’, which abolished the ceiling on employers’ PRSI, was the main focus of concern, with a budget deficit looming for the first time in years, controlling public spending tops all the economists recommendations for the Minister in this year’s pre-budget economist survey.
In what Jim Power of Friends First calls the ‘most difficult economic environment that any Minister for Finance has faced since Ray MacSharry in 1987’, the economists unanimously state that public spending must be brought under control to avoid what Dermot O’Brien of NCB calls ‘a risk of a repetition of the 1980s experience not too far down the line.’
While last year the economists recommended that taxes be cut, and the incidence of the higher rate of income tax be reduced, this year most economists urge that taxes should stay the same and not be increased. Alan McQuaid of Bloxham Stockbrokers however, says that income tax rates should be increased, as ‘a small rise in income tax rates won’t do too much damage.’
On the issue of benchmarking pay in public services, Colin Hunt of Goodbody Stockbrokers recommends that the Minister defer full implementation of the Benchmarking Body report until the global economic outlook is more certain.
Participants in the symposium are: Eoin Fahy, senior economist at KBC Asset Management, Austin Hughes, chief economist at IIB Bank, Colin Hunt, chief economist and head of research at Goodbody Stockbrokers, Dr. Dan McLaughlin, chief economist at Bank of Ireland, Alan McQuaid, chief economist at Bloxham Stockbrokers, Dermot O’Brien, chief economist at NCB Stockbrokers, Oliver Mangan, chief bond economist at AIB and Jim Power, chief economist at Friends First. |
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| Article appeared in the September 2002 issue.
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