Budget surplus less than expected

The budget surplus for 2001 will be £500m less than anticipated at the end of last year, Finance Minister Charlie McCreevy reported tonight.

He said the shortfall on his budget forecast was due to a slower-than-expected growth in tax revenues, due to a slowdown in spending, but maintained that the position would improve as the current year progressed.

Mr McCreevy, presenting his department’s half-year exchequer returns, added: ‘‘Public expenditure continues to be on target.

‘‘The outlook for public finances for 2001 as a whole and into the medium term is for a continuation at a reduced level of the large budget surpluses we have witnessed in recent years.’’

The figures came hours after separate returns from the Central Statistics Office indicating that last year the economy recorded its highest rate of growth in recent times.

With consumer spending up sharply, GNP rose by 10.4% and GDP was up by 11.5% - nearly 1% higher than the figure predicted by the department of finance.

That hoisted the growth over five years in the economy dubbed the Celtic Tiger to 51%, figures from the CSO revealed.

In its report, the CSO noted that consumer spending maintained its ‘‘buoyant trend’’ with an increase of 15% in 2000, equivalent to a 9.9% rise once price increases were discounted.

This was attributed, in part, to the ‘‘relatively high’’ cost of housing. Meanwhile, the export surplus rose last year by £1.8bn.

However, the Irish Central Bank has predicted GDP will grow by 6.5% this year, with a slowdown caused by trends in the global economy and the impact on Ireland of foot-and-mouth disease.

In the day’s third commentary on the Irish economy, the Industrial Development Agency, which encourages foreign investment to Ireland through the allocation of Government grants, said the number of jobs created by this year would be cut by half, to around 12,000.

Chief Executive Sean Dorgan said setbacks in the United States hi-tech sector were largely to blame for the change.

Economic analysts said the various sets of figures and forecasts confirmed a slowdown in the Irish economy, but also made the point that the growth was still be achieved at well above the rate of most other European states.

TheGovernment yesterday approved a TV licence fee increase of £14.50, to a new level of £84.50 for colour sets and £68.50 for black-and-white.

RTE had requested a £50 increase. Arts Minister Sile de Valera said a further rise would be considered in 18 months’ time on the basis of performance.

The TV licence fee has been the lowest in Europe for a number of years.