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Ireland increases budget package to fight inflation According to Reuters


© Reuters. People hold signs and flags during a protest about the rising cost of living, in downtown Dublin, Ireland, June 18, 2022. REUTERS/Clodagh Kilcoyne/File Photo

By Padraic Halpin

DUBLIN (Reuters) – Ireland may increase its budget package for 2023 to help combat soaring inflation, the Finance Ministry said on Monday after forecasting a small budget surplus rather than a deficit this year.

As a result, ministers have 6.7 billion euros ($7 billion) to increase spending and cut taxes next year, up from 4.5 billion euros previously, although almost half of that has already been spent. allocated to spending plans.

That would require a temporary suspension of a new rule imposed last year that ties growth in government core spending to nominal economic growth, with daily spending expected to rise. 6.5% next year instead of 5% predicted a year ago.

The Treasury Department forecast in April that revised domestic demand – its preferred measure of economic activity – would grow 3.9% in 2023. However, inflation has hit a 40-year high. year was 9.6% in June, Eurostat said last week.

Finance Minister Paschal Donohoe said he was confident the government would restore spending rules, but inflation would first have to return to around 2-3%.

“There’s a lot of evidence that the economic momentum we’ve seen lately is slowing down,” Donohoe told a news conference, adding that he believes that spending plans strike the right balance between helping people without adding to inflation.

Donohoe’s division on Monday said it could run a budget surplus of up to 0.5% of gross domestic product (GDP) for 2022 and between 0.25% and 0.75% of GDP in 2023, when Increased budget packages are taken into account.

In the €6.7 billion package, €3 billion is needed to meet spending on existing service levels, investment plans and demographic costs, while €1.05 billion has been earmarked for cutting income tax reduction.

The unallocated remainder for continued spending will also need to cover any new public sector pay arrangements agreed to by unions and the government. Negotiations between the two sides ended without a deal last month and have yet to restart.

Measures again to help people cope with higher energy bills in particular will be introduced alongside the €6.7 billion package.

The ministers, who also gave the budget announcement until 27 September from mid-October, said it could also include cuts to childcare and university tuition fees, a temporary extension of public transport prices. cheaper times and a series of welfare increases for poorer households.

(1 dollar = 0.9568 euros)

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