Backdrop for framing a budget has improved

The task of various ministers for finance in framing the budget since 2008 has been extremely difficult and painful, as it has been for taxpayers.

One gets a sense that the task facing Michael Noonan this year, while still difficult and painful, may not be as difficult or painful as in recent years. The reality is that the success or failure of any budget is heavily dependent on the existing and prospective economic background that it is being presented against.

In recent years both the domestic and external economic backgrounds have been extremely difficult and challenging. All the signs are that this year will not be quite as bad. On the external economic front most recent data releases are suggesting that things are getting better. In the eurozone, it was confirmed this week that the economy expanded by 0.3% in the second quarter, thereby bringing an end to six successive quarters of negative growth. Both household spending and business investment expanded during the quarter, which is good as it suggests that the economic recovery is somewhat broadly based.