Cowen Budget ‘won’t be dramatic’

FINANCE Minister Brian Cowen’s first Budget will not be dramatic, a leading economist told business people in Waterford city yesterday.

At a business breakfast organised by the Waterford Chamber of Commerce in association with the Irish Examiner, Ulster Bank’s chief economist Pat McArdle predicted Minister Cowen would have room for some additional spending and tax relief, but would not go far enough on capital programme spending.

“Minister Cowen has scope for a €500 million tax package, so we can all look forward to a reduction in our income tax bill this time round,” Mr McArdle said.

“I don’t think it will be a dramatic budget, but capital programmes are falling behind and without more spending it will not improve fast enough,” he continued.

The growing US deficit, unlikely to improve under President George W Bush’s second term in office, will continue to impact on the world economy, the economist said.

“No developed economy has sustained a deficit of over 5% of GDP for long,” he explained. He predicted a continuing decline of the US dollar, to $1.40 against the euro by next year.

On the positive side, Mr McArdle said the affordability of houses, relative to income, looks good as the boom in the industry continues on a steady scale. However, he estimated up to 5,000 fewer units may be built in 2005 as demand continues to be met by builders.

The construction industry will remain ahead of the rest for employment in 2005, with retail and the public sector also predicted to remain strong employers.

The breakfast at Dooley’s Hotel, which was sponsored by the Irish Examiner and Ulster Bank, was attended by many from industry and business in the city.

Mr Liam Fennelly, president of the Waterford Chamber of Commerce, said the business community looked forward to the budget with interest.

“We hope it will deliver on long-awaited infrastructure such as the roads and the development of the University of the South East,” he said.

Improvements to the health sector, in particular the provision of radiotherapy services to the South East, remain an ongoing concern for the business and local community, he added. “We hope to see that come a step forward,” Mr Fennelly said.