Easier budget ‘will backfire if economy fails to take off’

The decision to ease up on austerity in October’s budget could backfire and force the Government to introduce a tougher-than-planned budget next year if growth undershoots, the Irish Fiscal Advisory Council has said.

There is no “margin of safety” over the next 12 months as the Government faces €2bn in budget cuts next October in an effort to bring the budget deficit below the 3% target agreed with the troika by 2015, said the council.

The council now estimates there is a 50% chance the Government will miss its fiscal targets, compared with a 33% chance at the time of its last fiscal assessment report during the summer.