Commission report - Not yet out of the woods

The Government insisted in the budget that the worst is over. A leaked report by the European Commission suggests otherwise, hinting that a larger budget adjustment than planned may be required for 2015.

The commission says a commitment to bring the government deficit below 3% of GDP by 2015 is not yet underpinned by policy measures, and that current predictions are relying on the assumption of an adjustment of €2bn for 2015.

However, the commission draft report suggests that, based on the troika’s forecasts, a larger fiscal adjustment of around €2.5bn may be required to reach the deficit target. The commission also warns that Ireland is likely to see a “wave of legal cases” against homeowners in mortgage arrears.

Coming days before Ireland exits the bailout programme, the report is a sober reminder that we are not out of the woods yet.