Belfast Telegraph

Tuesday 21 October 2014

New spending cuts to be unveiled

The Government is due to unveil its budget

The Government is preparing to unveil a fresh raft of tax hikes and spending cuts in its budget.

Senior ministers will today announce a staggering adjustment of 2.5 billion euro - bringing to a total nearly 30 billion euro sucked from the economy in the last five years.

Young jobseekers will be among the casualties of the latest cuts and slices to public spending - in a nation where the unemployment rate exceeds 13%.

They can expect their dole payments to be slashed, while pensioners and a string of other social welfare recipients are likely to appear on the hit list.

Government leaders have insisted the tough measures are vital to help the country emerge from the clutches of the so-called Troika and its strict bailout programme, which it intends to do on December 15.

But as the nation braces itself for what will be the seventh austerity budget in just five years, there is little left in the barrel from which the Government can scrape more savings.

The Republic was forced to shore up 3.5 billion euro for 2013, 3.8 billion euro for 2012, 6 billion euro the year before, 4 billion euro for 2010 and 9.4 billion euro over the course of 2009 - to pay its way following the devastating banking and economic collapse five years ago.

The 2.5 billion euro adjustment for 2014 will be made of two parts spending cuts and one part tax increases.

The young and jobless could lose a third of their weekly dole payment as the personal rate of 100 euro per week that applies to 18 to 21-year-olds is expected to be extended to those up to the age of 24, who currently receive 144 euro).

While the elderly are likely to keep their core weekly rates, fuel allowance and free travel allowance are expected to remain untouched, they could see a chop in their telephone allowance.

Smokers can expect the cost of tobacco to rise, while tax on alcohol, soft drinks and gambling may also increase.

The Fine Gael-Labour coalition Government has pledged not to hit the nation's workforce, promising to leave income tax untouched.

But a moderate rise in a special VAT rate for leisure goods and services is expected.

Funding for health and social welfare faces the all-round biggest chop, but one area Social Protection Minister Joan Burton has refused to cut is child benefit.

Pupil-teacher ratios will be protected under the raft of spending cuts, while plans to introduce free GP care for under-5s will also remain on course.

This move by the Department of Health has been met with much criticism, with many calling for the system to be means tested, while some opposition politicians have warned sacrifices will have to be made somewhere to fund it.

The Government had originally intended to make savings of 3.1 billion euro - as recommended by the European Commission, the European Central Bank and the Economic and Social Research Institute (ESRI).

Much lobbying from junior coalition partner Labour and favourable figures in the latest Exchequer returns prompted a downward revision.

The Government insisted that the revised adjustment of 2.5 billion euro will enable it to exceed its deficit target of 5.1% of GDP in 2014 - reaching 4.8%.

According to its bailout agreement with debt masters - the European Commission, European Central Bank and the International Monetary Fund (IMF) - Ireland must reduce its deficit to below 3% of GDP by the end of 2015.

Its original plan for Budget 2014 and Budget 2015 was to make cumulative savings of 5.1 billion euro - 3.1 billion euro this coming year and two billion euro for the next.

The IMF urged the Government to compensate for this year's reduced adjustment next year.

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