Friday, August 01 12:03:25
A Budget adjustment of E200m rather than the E2bn flagged last year would help create an additional 10,000 jobs in 2015, employers' group, Ibec said today.
"Putting more people back to work must be the leading priority for the new Cabinet. Budget 2015 only needs to deliver a fiscal adjustment of E200 million, not E2 billion. Adopting this lower amount would mean 10,000 additional people at work in 2015," it said.
In its new Economic Outlook, Ibec raised this year's GDP forecast to 3.1pc (up from 2.9pc) on the basis of stronger than expected exports.
It has also significantly revised up its 2015 GDP forecast from 3.1pc to 3.9pc on the basis that a lower fiscal adjustment is now required.
Ibec said that conditions for Irish exporters will be buoyed with strong recovery in key markets allied to favourable exchange rates which means an expected export growth of almost 5pc for 2014. Improved market conditions in the UK and a more favourable exchange rate has led to a major boost for SME exporters, in particular.
Employment was up nearly 43,000, since last year, however, there was a slowdown in Q1. This highlights the need for government to further support business in creating jobs. Consumer spending: Rising employment and lower household savings should lead to an increase of 1.9pc this year, it said.
Ibec Head of Policy and Chief Economist Fergal O'Brien said: "Ireland's economic recovery is set to continue, more importantly it's becoming more broad based. There is now good momentum in the Irish economy and we have revised upwards our 2015 GDP forecast to nearly 4pc to reflect this. However, this forecast takes into account that our recommended reduction in the budget adjustment would lead to positive feedback on both private consumption and investment. The upcoming budget presents government with an opportunity to stimulate growth and get more people back to work."
Ibec said that new economic data means less austerity is needed. Ireland is required to reach a 2.9pc budget deficit target in 2015, but it believes that a prudent approach would be to target a 2.7pc deficit. "Crucially, this will support Ireland's reputation and credibility in the international financial markets. The 2.7pc target can be reached with a net fiscal adjustment of just E200 million."
"With the economy doing well, the resources are now available to reduce income and consumer taxes. Consumers deserve a break and getting more money back into the economy will boost economic activity and support job creation. Recommended changes include; increase the entry point to the marginal tax rate from E32,800 to E34,800, reduce the marginal tax rate from 52pc to 51pc and drop the unfair pensions levy."
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