Budget decisions a Government matter, Kenny says

Taoiseach Enda Kenny has said it is a matter for Government to take budgetary decisions after criticism from the Irish Fiscal Advisory Council.

The Council's chairman has warned Ireland is at risk of repeating the budgetary errors of the past.

Speaking on his way into Government Buildings for the Cabinet meeting, Mr Kenny said the Council was completely independent and their comments were valued by Government.

“Obviously at the end of the day it’s matter for Government to make decisions...the Government has accepted some of the recommendations, not all of them by any means.”

Earlier, the Minister for Public Expenditure and Reform said Ireland would achieve the deficit it set out for itself.

However, in terms of the Council’s view that the Budget should have been tougher, he said: “I think there are other considerations for Government rather than simply the impact it would have on the deficit.”

Mr Howlin said the impact on growth and social cohesion were also important for Government.

“We are not only running an economy but also a society as well.”

Enda Kenny was responding to comments by the chairman of the Irish Fiscal Advisory Council.

“Politics may again be leading us to the kind of mistakes we’ve made in the past,” Professor John McHale said, pointing to the “pressure” for tax cuts and spending increases that was building on politicians.

“Politics can pull government in a different direction to what economists think is appropriate fiscal policy,” he said.

Professor McHale said that the Government “missed an opportunity to very decisively move the budgetary situation into a zone of safety” by not sticking with its original plan for €2 billion in tax increases and spending cuts in Budget 2015. He said that as a result Ireland’s debt levels will be roughly €10 billion higher in 2018 than if it had stuck with this strategy, instead of introducing a budget which increased borrowing by €1 billion.

While Ireland is “continuing to make progress”, and the Government will likely accomplish the “important milestone” of reducing the deficit to below the 3 per cent ceiling in 2015, there are challenges ahead, not least that posed by the uncertainty surrounding economic growth. If growth comes in below forecast, the budget figures could quickly be thrown off course, the council report warns.