Budget deficit reductions may be used to build factories

Reductions in the budget deficit may be used to fund the building of ready-made facilities such as factories and offices in a bid to lure large-scale foreign companies to Ireland and boost employment.

Jobs Minister Richard Bruton wants to use extra funds from any easing of budget measures to help the IDA attract foreign direct investment. The battle lines are currently being drawn between ministers ahead of October’s budget with potentially €600m in savings up for grabs. Cabinet ministers will hold a special meeting on Thursday on job creation, with a particular focus on the construction sector.

The extra funds available from the Anglo promissory note savings could see the budget adjustment reduced down to €2.5bn from a target of €3.1bn.

A source close to the Fine Gael minister told the Irish Examiner: “Our funding partners [the troika] want us to stick to the task. We’re looking at the options, particularly the capital spend to support the jobs agenda.

“Issues such as FDI [foreign direct investment] — there’s a shortage of offices. These companies want factories and customer care facilities, ready- made facilities.”

Mr Bruton yesterday said his priority would be job creation in any budget talks.

“I’ve already said in the past that the very high margin of tax rates on low income is an obstacle to employment, but I recognise that each minister will come with sets of requirements in the budget,” he said.

However, Fine Gael and Labour are at odds on how any budget adjustment can be used. While Fine Gael want any extra money pumped into job creation, Labour are looking at reducing the level of social welfare cuts that will be necessary in the budget.

Social Protection Minister Joan Burton must make savings of €440m in her department.

A source close to Ms Burton said: “The recognition in Labour is this too high.”

Ms Burton recently told an Oireachtas committee that her department had implemented cuts of €3bn over three years, but that there was a limit to how much society could take.

Cabinet ministers are this week in discussion with troika lenders, who are conducting their latest review of Ireland’s financial bailout commitments.

Any proposals to limit cuts and savings in the budget must be cleared with the troika.