INFORMATION NOTE ON THE ECONOMIC AND BUDGETARY OUTLOOK 2011-2014 (in advance of publication of Four-Year Budgetary Plan)
INFORMATION NOTE ON THE ECONOMIC AND BUDGETARY OUTLOOK 2011-2014
(in advance of publication of Four-Year Budgetary Plan)
Since the onset of the current economic and financial crisis, the Government’s strategy for recovery has been based around three key principles:
- Restoring competitiveness;
- Repairing the banking system; and
- Returning sustainability to the public finances.
Price and earnings data confirm that significant competitiveness adjustments have taken place since 2008. The Statements on Banking on 30th September brought clarity to the costs and methods of recapitalising our banks.
The 30th September statement also reaffirmed the Government’s commitment to achieving a General Government Deficit of 3% of GDP by the end of 2014. The statement also committed to the publication of a Four-Year Budgetary and Growth Plan which will set out a credible path for the achievement of the 3% target. The plan will be published later this month.
Having reflected on the views expressed by Deputies during last week’s Dáil debate, the Government has decided to publish this information Note.
Commenting on the release of the Information Note, the Minister for Finance said:
“Over the past two and a half years, the Government has consistently demonstrated its determination to restore stability to the public finances.
Since mid-2008, the Government has implemented measures worth close to €15 billion in order to stabilise the position. The Exchequer Returns in recent months and other data shows we are succeeding. This stabilisation must now be followed by a reduction of the deficit in line with the commitments given. I welcome the agreement of the main opposition parties to the 3% deficit target by 2014, which sends out a strong signal that Ireland is committed to putting its public finances in order.
The Government has decided that a consolidation package of €15 billion will be required over the course of the next four years if we are to deliver on our deficit reduction target.
A significant frontloading of the consolidation in 2011 is deemed necessary and will underline the strength of our resolve and show that the country is serious about tackling our public finance difficulties.
By the end of 2011, we will have implemented over two-thirds of the overall adjustment and we will be on a path towards renewed budgetary sustainability. Through consolidation we aim to stabilise our General Government debt to GDP ratio over the 2012 – 2013 period, before reducing it thereafter.
The Government has agreed on an adjustment of €6 billion for 2011 and this will reduce the General Government deficit to around 9¼ to 9½% of GDP next year. Taking account of the €15 billion consolidation package, my Department now expects annual average real GDP growth to be 2¾% over the 2011 to 2014 period.
I want to stress again the strength of the Government’s resolve to return the country to a sustainable fiscal position. I am well aware that such measures will impact on the living standards of everybody. But our spending and revenues must be more closely aligned. This is the only way to ensure the future economic wellbeing of our society.”
Further details on the nature of the adjustment for 2011 and the distribution and composition of the measures over the remaining years of the forecast period will be announced in the Four-Year Plan. In addition the Plan will outline a programme of structural reform, which will help to further restore competitiveness and support economic growth. The Plan will be published later this month.
4th November 2010
ENDS
