On November 16, all ears were pointed in the direction of Brussels, where the European Commission (EC) issued its annual opinion on eurozone members’ budgets. It stated that Ireland’s document was “broadly compliant” with the rules of the Stability and Growth Pact, but warned that the additional government spending should be offset by savings elsewhere.
Welcoming the Commission’s guarded approval, Mr Noonan said: “In relation to this year, the Commission notes that Ireland is on track to correct the excessive deficit in a timely manner. The Commission forecasts for economic growth, for the headline deficit and for the public debt ratio are broadly in line [with] that of my own Department.”
The Irish Fiscal Advisory Council, however, was a little more critical in its assessment of Budget 2016.
“The fiscal forecasts in Budget 2016 do not provide a meaningful anchor for medium-term budgetary planning. . . Expenditure projections imply a large decline in the ratio of non-interest government spending to GDP of over five percentage points by 2021 while forecasts for tax revenue do not take into account explicit Government commitments to reduce taxes,” the Fiscal Advisory Council said in a report released earlier this week.
The detailed report examines the fiscal stance for this year and next, assesses budgetary forecasts and examines compliance with fiscal rules. Download the full report here.