ESRI: Pay deal vital to hit target

The Government’s prospects of achieving the spending cuts needed to meet year-end budget deficit agreed with the troika hinges on a successful completion of the Croke Park negotiations, according to the latest ESRI Quarterly Economic Commentary.

It forecasts that the budget deficit was 7.9% of GDP in 2012, which was well within the 8.6% target agreed with the troika on the back of a much better than expected. But the ESRI says it is unlikely that the robust performance last year will be repeated this year.

“Although an improvement in economic growth and labour market stabilisation will result in higher tax revenues, our expectation is that it will continue to be difficult to reduce expenditure levels in 2013 to the extent sought by Government. However, there could be sufficient momentum in changes sought in the current Croke Park negotiations to provide a significant carryover into 2014.”