The Irish Fiscal Advisory Council will tell the Department of Finance today whether it endorses the economic forecasts underpinning its plans for Budget 2015 next week.

There is no expectation in Coalition circles of any rebuttal of the Department’s figures, but the council has adopted a questioning stance in relation to the Government’s budgetary strategy in recent weeks.

At issue are a range of assumptions already made in respect of economic growth this year and in 2015, and underlying variables in respect of demand, prices, exchange rates, labour market developments and interest rates.

Growth upgrades

After a series of growth upgrades, Minister for Finance Michael Noonan has indicated that the budget will be predicated on 4.7 per cent growth in gross domestic product this year. The GDP growth forecast for 2015 is roughly 3.5 per cent, it is understood.

The council was established as a statutory body in the wake of the crash to monitor economic policy.

It has already called for a €2 billion retrenchment next year, but Mr Noonan is set to spurn such advice by introducing a “neutral” budget with no new spending cutbacks and no net increase in taxation.

One of the council’s main functions is to assess and comment publicly on whether the Government is meeting its own budget targets and objectives. But its sole task at this point is to say whether it endorses the projections underscoring plans for the budget.

Before committee

At a hearing this afternoon in Leinster House, senior Department of Finance officials will set out to the Oireachtas finance committee the macro- economic forecast on which the budget will be based .

They are likely to be asked at the committee whether the council has endorsed the projection.

The hearing comes after the lunchtime release of the latest World Economic Outlook forecast by the International Monetary Fund, which will show if it has upgraded forecast of 1.7 per cent GDP growth this year and 2.5 per cent growth next year.

An upgrade is considered likely after a big increase in economic growth in spring and early summer, which has prompted increasingly ambitious forecasts from a range of analysts

Business lobby Ibec is now forecasting growth of 6.1 per cent this year, almost twice its previous 3.1 per cent projection, well ahead of the 4.7 per cent foreseen by Mr Noonan.

A study released yesterday by the Economic & Social Research Institute suggested the economy continued to expand strongly in the third quarter of the year after rapid second quarter growth.

‘Nowcasting’

ESRI researcher David Byrne said an assessment of data using “nowcasting” methodology suggests gross national product (GNP) grew 2.4 per cent in the third quarter compared with the second quarter.

This is markedly ahead of the second quarter GNP growth rate in official Central Statistics Office figures, which recorded 0.6 per cent quarter-on-quarter growth.

The same “nowcasting” approach suggests gross domestic product (GDP) grew by 2.3 per cent in the third quarter compared with the second.

This, too, would be well ahead of second quarter GDP growth in the most recent CSO figures, which said quarter- on-quarter growth was 1.5 per cent.

However, the “nowcasting” examination of second quarter data pointed to a higher quarter-on-quarter GDP growth rate of 2.1 per cent.