€2bn consolidation ‘must be adhered to’

The Central Bank is urging the Government to stick to the planned €2bn consolidation in October’s budget in order to meet the 3% fiscal deficit target next year.

In its latest Macro-Financial Review of the economy the Central Bank says that a “failure to adhere to agreed fiscal measures and to maintain compliance with EU fiscal rules in the coming years would undermine investor confidence and would not support financial stability.”

The scale of October’s budget adjustment has become intensely political. Austerity fatigue was one of the key factors behind the voter backlash against the Government parties in the local and European elections. The two candidates for the Labour Party leadership, Alex White and Joan Burton, have both pledged to ease up on budget cuts if they are elected.