Higher taxes and harsher cuts on budget horizon

HIGHER taxes and harsher cuts are on the way after Finance Minister Brian Lenihan insisted the Government will be “relentless” in seeking more savings than expected in the next budget.

Mr Lenihan revealed the previously indicated cuts of €3 billion is merely “indicative” and “there is scope for the Government to increase that figure if they are so minded”.

His revelation was in direct contradiction to a commitment given by Taoiseach Brian Cowen hours earlier that the €3bn target remains.

“The plan that we have agreed with the European Union Commission is on the basis of further adjustments of €3bn. We’ve consistently said that we will meet that target,” Mr Cowen said at the Fianna Fáil parliamentary party meeting in Galway.

But Mr Lenihan indicated it could be much higher. “The figure of €3bn is a minimum but again the Government will have to go through the different departments, we will have to look at what can be saved and what the correct position is,” he said.

In seeking cuts, the Government must find a balance in what cuts the economy can withstand.

“Last year we were told by many in the opposition parties that in seeking the €4bn we would in some way damage the economy but in fact as we have seen there has been economic growth this year so that’s the balance the Government has to draw,” he said.

Fine Gael said the minister’s warning over harsher budget cuts was “motivated by a desire to stiffen the resolve of backbenchers for these deeper cuts”.

The party’s spokesman on finance, Michael Noonan, blamed the budget cuts on bank bailouts: “The ever-rising cost and uncertainty surrounding Anglo Irish is beginning to bite,” he said.

Addressing TDs and senators, Mr Cowen admitted that the €22.9bn cost of bailing out Anglo Irish Bank was a “terrible burden” for the nation. But he said it would take Fianna Fáil far less time to fix the economy than what was being proposed by Fine Gael’s Enda Kenny, who yesterday claimed it would take a decade for things to get back to normal.

Mr Cowen would not say how soon he is promising to fix the economy but said: “The policies we are pursuing is bringing growth back into the economy, what we have to do now is try and boost employment as well.

“I don’t know what Mr Kenny’s policies are. It could take him 20 years the way he is going at the moment.”

Mr Lenihan said: “I’ve had plenty of difficulties in the past two years, I don’t deny that. We’ve had difficulties with our forecasts, I don’t deny that. But certainly, given the chance, I will have this problem sorted out and this Government will have this problem sorted out a lot earlier than 10 years.”


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