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Claims budget breaks European rules to avoid economic meltdown dismissed

Published 14/10/2015

Michael Noonan said there had been ongoing dialogue with the European Commission over Budget 2016
Michael Noonan said there had been ongoing dialogue with the European Commission over Budget 2016

The Government has dismissed claims the budget has broken strict European rules designed to avoid another economic meltdown.

Finance Minister Michael Noonan and Minister for Expenditure and Reform Brendan Howlin rejected analysis by their own advisers which warned they were spending too much money.

The main bone of contention centres on plans announced late last week to increase current spending by 1.5 billion euro this year which effectively doubles the size of the budget next year.

"It's not about if I tax it I'll spend it," Mr Noonan said.

The minister said Budget 2016 was a package of 1.5 billion euro which does not involve the spending of all the tax coming into the exchequer coffers.

Mr Noonan said it was "not true" to say the Government's plan was to spend when it has it. He said the purpose of the budget was to sustain economic recovery through job creation while putting four billion euro into reducing the country's debt.

"The taxes come out of the economy. We are not putting them all back," he said.

Professor John McHale, of the Irish Fiscal Advisory Council, spoke to RTE's Morning Ireland to challenge the Government's spending plans, both the additional money needed to keep services running this year and the extra money being pumped into health, housing, welfare and education next year.

The adviser said spending this year appears to be 1.7 billion euro higher than budgeted for.

"We did anticipate that there would be overruns in health, but we didn't see that other spending coming," Prof McHale said.

Mr Howlin said: "It's the job of Ifac to be prudent and ultra-prudent. I'd be surprised if we did not hear that voice.

"We obviously check our facts very carefully. We are now in strict fiscal rules and we are very confident that we meet them."

Mr Noonan rejected the professor's claims about European rules and said there had been ongoing dialogue with the European Commission over Budget 2016.

The ministers fielded questions from the public on RTE's Today with Sean O'Rourke.

Mr Howlin said the biggest message the Government received in the preparation for the budget was to ease the burden of childcare costs, mainly to allow women to get back to work.

Mr Noonan stressed that Budget 2016 should be seen as a "first step".

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