Noonan hints at easing austerity
The budget will save less than 3.1 billion euro (£2.6 billion) in tax hikes and spending cuts, Finance Minister Michael Noonan has revealed.
Despite warnings from the Central Bank not to ease off on austerity, Mr Noonan followed up a report on strong Exchequer returns with a hint that the October 15 adjustment may be less harsh than anticipated.
The Government has been buoyed by an increase in tax this year, a fall in spending and steady drops in unemployment, with emigration playing a key part.
"We think we can do it somewhat less than the 3.1 billion, but we still have a lot of number crunching to do to see where we come in," he said.
The Central Bank warned the Government that any let up in austerity risked Ireland's hopes of exiting the bailout.
But Mr Noonan said getting the deficit down to at least 5.1% next year remained a priority.
In its latest quarterly bulletin, the bank cut its previous economic growth forecasts - 0.5% this year for all goods and services, including multinationals as measured under gross domestic product.
That was down 0.2% on the original estimate.
It also cut its projections for the Irish-owned sector of the economy, gross national product, down to 0.1% and 1.2% next year.
"No easing off in adjustment," was the message from the bank ahead of the October 15 budget.
Amid planning for Budget 2014, official Exchequer figures showed the tax take to the end of September was up 768 million euro (£643 million) to 26.9 billion euro (£22.5 billion), while spending had been cut by 1.6 billion euro (£1.3 billion) to 31.6 billion euro (£26.5 billion).
Some of the most significant improvements were in VAT, up 3.9%, and corporation tax, up 7.1% on the year.
But the VAT take for the year was running 2% behind schedule despite a boost from new car sales.
Mr Noonan described the figures as "pretty good".
"The first thing to note is that the anxiety coming out of August has now disappeared," he said.
"VAT figures are very strong.
"We're on target to meet the deficit target of 2013 of 7.5%.
"The significance of that for the budget and 2014 is we'll be starting the next race from the starting line, not five yards behind it, which is the problem if you don't meet your target in the preceding year."
Other figures of note in the Exchequer returns were 200 million euro (£168 million) collected from Local Property Tax receipts, of which nine million euro (£7.5 million) were received in September.
Corporation tax for the year was 10% ahead of the target.
Elsewhere, the Central Bank estimated that the economy would push on next year and turn out growth of 2%.
It said its figures pointed to continued gradual recovery, but slower than it originally anticipated after exports slowed and consumer spending dipped this year.
Unemployment was forecast to be 13.6% this year and 13% next year.
The report noted that full-time employment was growing for the first time since early 2008 and it said this suggested that consumer spending would be boosted.
The bank warned of three remaining challenges - fiscal consolidation, banking soundness, and competitive wages and prices.
"Market participants will focus closely on how Ireland is likely to perform outside the (bailout) programme and whether the sustainability of the overall debt position is firmly secured," it said.
"These considerations underpin the bank's view that there should be no easing off in adjustment."