Finance Minister Michael Noonan has warned the country to brace itself for a “tough” budget, despite the exchequer having more money than expected.
He moved to dampen expectations of a relatively benign budget even if the Government uses the €1bn windfall from the promissory note deal to ease the financial pain in October.
Mr Noonan would not be drawn on calls from fellow Fine Gael ministers to use the money to cut taxes, but said he now had room for manoeuvre. However, he warned against people raising their hopes that austerity was coming to an end.
“The leeway is only to reduce the impact of the severity. Whether it is going to be an adjustment of around €3bn or around €2bn, it’s still going to be a tough budget,” he told RTÉ.
“There are options; we could ease up on the correction process and still meet our target, and that would be less cutbacks and less tax increase. On the other hand we could use it to invest in infrastructural projects, or we could do something in between.”
Labour figures have called for the extra resources available to be used to limit the impact of cuts in the planned €3.1bn financial adjustment which is being brought forward this year due to Eurozone harmonisation.
The minister insisted that the key economic aim of the harsh budget was to bring the deficit back under control and reduce it to 3% by the end of 2015.
Mr Noonan branded the revelations in the Anglo tapes “appalling” but said the Government was not dragging its feet in response to the financial collapse, adding that he did not want to prejudice any future criminal proceedings emerging from it.
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