The Chairperson at the Irish Fiscal Advisory Council, Sebastian Barnes has said that the Government has managed to strike a reasonable balance in the Summer Economic Statement between supporting the economy and helping the most vulnerable.
The Summer Economic Statement announced on Monday confirmed the Government’s plans to unveil €6.7 billion in new spending and tax measures on Budget day, which has been brought forward to September 27th.
Spending next year will increase by 6.5 per cent, which breaches the Government’s own spending rule of five per cent. The spending rule was good, Mr Barnes told RTÉ radio’s Morning Ireland, but these were circumstantial circumstances, so it did not make sense to stick to the five per cent rule.
The planned spend of 6.5 per cent “is a long way from chasing inflation at nine per cent” he added.
Overheating the economy was a risk with pressure on rents and global factors, said Mr Barnes.
Balance
The balance struck by the Government in the Economic Statement was supporting the economy and helping the vulnerable while at the same time not putting too much money into the economy.
“The balance is right.”
However, Mr Barnes cautioned that most of the Government spending so far had not been targeted. The balance could be better and it was important that the Budget be more targeted.
The issue of tax was quite complicated, he said. There was a good case for tax cuts to avoid tax increases.
Long term issues such as the over reliance on corporation tax needed to be addressed at some stage.
