Economic growth that looks a lot like the big numbers chalked up during the early Tiger years was the headline to emerge from the latest GDP figures released yesterday by the CSO.
But the large growth figures will likely mean the budget measures Finance Minister Michael Noonan is preparing to unveil are likely to be far more substantial than he wants to let on at this stage.
The eye-catching graphic in the CSO release showed that Ireland is again an outlier in Europe but this time for the right reasons.
Ireland is outstripping everyone in the European growth league, by a huge margin.
There has been little doubt that the long–delayed recovery is picking up steam.
The monthly tax revenues have long been a reliable and timely guide to the economic forces building in the economy.
The exchequer’s coffers have been filling up rapidly in recent months.
And yet the Coalition which is preparing to unveil a budget in the next few weeks, the last before it seeks re-election, says its hands are tied by the new EU spending rules.
Highly-indebted countries are supposed to be fixated on paying down their debts.
Speaking to journalists, Finance Michael Noonan insisted that the Government would stick to its April commitment for a budget package of spending increases and tax cuts of between €1.2bn and €1.5bn.
And yet the growth figures will provide him with ammunition to argue the case in Brussels for a much bigger expansionary budget because Ireland’s debt position is improving at a rapid pace.
Many believe that the budget package will be more than €1.5bn, and, possibly, as much as €2bn.
Mr Noonan described the latest quarterly GDP growth figure as “extraordinarily strong”.
Even if the economy shuddered to a halt in the next few months, economic growth this year would still be eye-catching.
Ireland’s economy would likely grow by around 6% this year, he indicated. In April, the Government forecast the economy would grow by 4% this year and by 3.8% in 2016.
Huge tail winds have boosted the growth figures, he said. Oil prices have almost halved from last year and provided a huge boost to consumer spending.
The European Central Bank, which started its Quantitative Easing bond-buying programme earlier than expected, has boosted the eurozone economy.
Significantly, he said that rapid economic expansion means that Ireland’s gross debts as a proportion of its GDP would fall below the 100% level faster too.
It will likely drop to around 98% of GDP this year, about two years earlier than projected last April.
Proceeds from the financing of preference shares and other debt instruments in AIB will deliver up to €4bn in proceeds, even before the Government sells off an initial stake in the bank next year.
That will go to pay down debt. Mr Noonan went on to list the Government’s objectives in the looming budget, bringing down personal taxes so that emigrants can come back home, boosting child care provision to help more women get back to work, as well as unspecified incentives to innovate the economy.
It sounded much like a rehearsal for the arguments he will pitch to Brussels for an expansionary budget.
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