Figures a huge boost for Government

The latest exchequer figures will provide a huge boost to the Government’s efforts to make a successful exit from the EU/IMF bailout programme later this month.

There was a budget deficit of €8.6bn at the end of November, which was a €4.4bn improvement on the first 11 months of 2011.

“This is by some distance the strongest set of Exchequer figures produced this year, with tax revenues coming in 3.1% ahead of forecasts. In the context of our upcoming exit from the bailout terms, they should give further confidence to both current and prospective investors in Irish debt,” said Peter Vale, a partner at the consultancy firm, Grant Thornton.

“We are finally seeing positive employment and earnings growth translating into increased activity in the domestic economy. People have the confidence to divert savings to spending, which should give hope to retailers that spending through the holiday period will be strong,” he said.

Tax revenues to end-November remain in line with expectations, up €214m (0.6%) on profile and up €1,407m (4.2%) year-on-year, while net voted expenditure is €844m (2.1%) under profile and down €1,805m (4.4%) on the same period last year, said the Department of Finance.

Tax revenues for the 11 months to the end of November were €35,181m, which is up €1,407m compared with last year and up €214m on profile.

Net voted expenditure at end-November 2013 was €38,829m, which is 2.1% or €844m below profile for the period. The figures represent a year-on-year decrease of 4.4% or €1,805m with all departments broadly on profile, said the Department of Finance.

Non-voted capital expenditure, at €960m to end-November, was down €1,450m year-on-year. This reduction is primarily driven by base effect of the State’s successful investment in Irish Life in 2012 of €1.3bn.

“In all, the above provides further comfort around the public finances. The Department of Finance’s projected 2013 Exchequer balance of -€11.3bn (and general government balance of -7.3% of GDP) still look like they will comfortably be beaten, with the combined out-performance from tax receipts and discretionary expenditure, at €1.1bn, equating to circa 0.7% of GDP. The recent uptick in tax receipts is encouraging and suggests a potential tailwind to Government revenues as we move into 2014,” said Investec chief economist, Philip O’Sullivan in a research note.

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