The Government will not base the upcoming budget on claims Ireland’s economy surged by 26.3% last year, despite insisting that the eye-catching rate is “not wrong”.
Finance Minister Michael Noonan yesterday outlined the situation amid claims from the opposition that the CSO’s updated growth level has undermined Ireland’s international credibility and shown the country is not taking tax avoidance seriously.
Speaking at the launch of the Government’s mid-year expenditure report, Mr Noonan confirmed that the Government is standing by the 26.3% gross domestic product growth rate outlined by the CSO on Tuesday.
However, while stressing the figure is “not wrong”, he added the Departments of Finance and Public Expenditure and Reform will ignore the “exceptional” percentage when it comes to planning for next year’s budget and instead focus on a likely 5% growth for 2016.
Mr Noonan said allowing the official 26.3% growth to influence budget planning would mean a return to “old politics” and “bad budgets”, describing the rate as a “rear view” mirror reflection of the economy.
Asked if the 26.3% growth was “illusory” because of the sudden increase from a March projection of 7.8% and its links to the decision by a number of multi-national firms to technically set up headquarters in Ireland after moving from Caribbean tax havens, Mr Noonan said while there is “nothing to hide” any spending needs to be “sustainable”.
“It’s not that the CSO made an error. But if I was to base my pay policy decisions on that kind of growth rate then we would be making an error.
“As you saw in the spring statement [a quarter year Government economic statement], we’re talking about growth rates of 5% this year, and coming down to about 4% for 2017,” he said.
The comments came as Mr Noonan launched the mid-year expenditure report alongside Public Expenditure and Reform Minister Paschal Donohoe.
The document states that an extra €1bn will still be available to spend next year on services and tax cuts, and that €53bn will be used next year for day-to-day spending
The CSO’s 26.3% growth rate for last year dominated Leaders’ Questions yesterday, with Fianna Fáil leader Micheál Martin repeatedly criticising Taoiseach Enda Kenny over the affair.
The opposition leader said the figures were “farcical” and the reality is no one outside of Ireland believes they are true.
He said the 26.3% growth claim was like something “out of Soviet Russia” and that “these figures are false figures that do not reflect real Ireland”.
“No one in their right mind out there believes the official Irish statistics,” he said, asking Mr Kenny to set up a new group within the CSO to differentiate between actual growth and growth due to questionable financial calculations.
Responding to the comments, Mr Kenny said Government will base its budget planning on “a more normal growth rate”, but stressed the CSO figures are “compiled accurately”
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