Government deficit down to 5.6% at end of first quarter

The Government deficit fell to 5.6% at the end of the first quarter, according to the Central Statistics Office.

The general government deficit was €2,432m in the first quarter of 2014 representing 5.6% of quarterly GDP.

In the corresponding quarter of 2013, the deficit had amounted to €3,326 million or 7.9% of quarterly GDP, said the CSO.

National income increased by €736m over the first three months to €14,599m compared with the same period in 2013. Government expenditure decreased by €158m over the first quarter compared with 2013.

Total spending reached €17,031m in the first quarter, with a decrease observable in most categories of expenditure.

Gross government debt at 122.2% of GDP at end Q1 2014 which amounts to €215bn.

General government net debt amounted to €160.9billion in Q1 2014, or 91.4% of GDP compared to €160.8bn or 92.0% of GDP in Q4 2013.

The Government has agreed with the troika to reduce the deficit below 3% by the end of 2015.

The IMF, the EU Commission and the Irish Fiscal Advisory Council have all urged the Government to implement €2bn in budget cuts next October to ensure it reaches this target.

However, Finance Minister Michael Noonan, has said that it now looks like an adjustment lower than €2bn because of better than expected growth and exchequer figures.

Bank of Ireland released its latest quarterly outlook, which contained a very bullish set of forecasts.

It expects GDP to increase by 2.8% this year and 3.4% next year. The unemployment rate is expected to fall to 11.5% by the end of this year and 10.4% by the end of 2015.

Bank of Ireland chief economist Loretta O’Sullivan said the recovery will be much more broad-based and a pick-up in domestic consumption will complement a robust expert performance.

Bank of Ireland’s growth forecast is much higher than the Government’s.

If growth pans out anywhere near 2.8% this year, then the budget adjustment required to reach the 3% deficit target would be much lower than €2bn.