McCarthy: No choice but to cut public pay and welfare

The author of the 'An Bord Snip Nua' report has said that the economy is in a worse state now than when the document was released in July.

Economist Colm McCarthy, head of the Special Group on Public Service Numbers and Expenditure Programmes, as the advisory committee that produced the report was titled, today told the Oireachtas Finance Committee that tax income has plummeted further since the report was drawn up.

Mr McCarthy said Ireland is in the deepest and most serious economic downturn since the Second World War.

He added that the Government will have no choice but to cut social welfare and public service pay on in the Budget on December 9.

He said that not to do so would mean the proportion of cuts across other areas of expenditure would have to be much bigger.

Mr McCarthy also said it would be prudent for the Government to defer a number of major capital building projects until growth returns to the economy.

The economist said certain projects should be delayed not just because it would save money but because there is currently no economic demand for them.

Mr McCarthy also said no government department should be exempted from cuts in December's Budget.

And he rejected the idea that tax incentives or stimuli would generate more money for the economy than budget cuts.