herald

Monday 26 September 2016

Extra spend on health hits deficit forecasts

budget

The Budget deficit, the gap between how much the State spends and takes in through taxes and other revenue, last year was 4.1pc of the value of the economy, missing the Government's forecast in the Budget, according to official data from the Central Statistics Office.

The figure was broadly in line with expectations in recent months, in part because of extra spending in Health and Justice.

The data comes a week before Finance Minister Michael Noonan and Public Expenditure and Reform Minister Brendan Howlin are due to unveil the so-called spring statement in the Dail, which will include revised economic forecasts that are thought to reflect the better-than-expected tax revenues.

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In October, the Department of Finance had estimated the deficit would narrow to 3.7pc of gross domestic product (GDP) in 2014.

However, the deficit figure remains significantly within the 5.1pc target the Government needed under European rules.

Earlier this year the Department of Finance said the Budget deficit would be slightly worse for 2014 than forecast last October because of overruns in Health and extra pay approved for gardai and prison officers.

In addition, money was set aside to deal with storm repairs caused by extreme weather early last year and a pension package for the workers of Waterford Wedgwood.

Both ministers Noonan and Howlin will make separate statements back-to-back in the Dail next Tuesday, similar to the routine on Budget day.

However, neither will outline specific tax or spending measures. Instead, it is expected they will focus broadly on policy direction, while outlining the constraints within which they must operate.

"Anybody that is expecting to get budgetary measures announced will be disappointed," a spokesman said.

The CSO said yesterday that the deficit was €7.63bn last year, an improvement on the 2013 position of €10.15bn.

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