CENTRAL BANK URGES GOVERMENT TO STICK TO BUDGET PLAN
The Central Bank is urging the government to stick to its agreed commitments for Budget 2015. It comes amid increasing speculation that the coalition will impose less than 2 billion euro worth of cuts and tax increases.
In its latest quarterly bulletin released this morning, the Central Bank has also raised the level of growth it expects to see in the economy this year.
A GDP increase of 2.5 percent is now being predicted, which is a jump of 0.5 percent.
But it adds that the budgetary plans for 2015 “need to meet agreed commitments”.
The Central Bank says “the improved growth dynamic over recent quarters suggested by the National Accounts data is being driven, in large part, by a rebound in exports since late 2013. This would appear to reflect both some recovery in the output and exports of the pharmaceutical sector, suggesting that the impact of patent expiration on pharmaceutical exports may be easing, as well as the positive effect of an improving international economic environment”.
But it also says that despite the on-going recovery in employment, consumer spending has remained subdued “with modest declines recorded in both the fourth quarter of 2013 and the first quarter of this year”.
And it adds that more recent trends “offer some encouragement, with retail sales data for the second quarter suggesting that consumer spending may be picking up”.
However as our Business Editor Ian Guider explains, officials are warning now is not the time for a ‘giveaway budget’:
“They do believe the economy is improving – but they’re warning of potential shocks down the line” he said.
They do believe that the government will hit its deficit targets – that’s very important – but they are saying (to) have an additional buffer there just in case the economy takes a turn for the worst”.
“And also even though the economy’s improving our debt levels are huge; we still have a huge amount of money to repay – both at government level and at consumer level as well” he added.