EU official urges caution on public spending hike

A senior EU finance official has told Government not to increase public spending too soon if it wants to prevent a fresh boom and bust cycle.

European Commissioner for economic and financial affairs, Pierre Moscovici, made the comments during the latest Dáil finance committee meeting yesterday.

Speaking to the cross-party body before separate “courtesy” meetings with Finance Minister Michael Noonan and Tánaiste Joan Burton, the former French government minister said the outlook for Ireland’s economy is “very impressive” after “astounding” recent results.

However, despite what he claimed is a sustained nationwide recovery that shows “adjustments do pay off”, the EU official stressed “that is not to say the journey is over”.

“Everything possible must be done to avoid the boom-bust cycle,” Mr Moscovici said, pointing to “medium term budgetary policies” and “prudent growth forecasts” as essential in “reducing the risk of cycles”.

The call for sensible financial policies comes weeks after the Government’s spring statement said an extra €1.5bn will be available to spend every year until 2020, provided the financial outlook does not fall.

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