Irish Spring Statement: The Coalition's announcement today of plans for tax cuts and spending rises in the coming three years will mark the unofficial launch of the general election campaign, which must be held at the latest by March 2016.
Michael Noonan, finance minister, on Monday confirmed that pressure will be put on banks to reduce variable mortgage rates.
The Irish Times reports that the Government’s spring economic statement will set out scope for €2bn in tax cuts in the next three years and it is being cast "as the opening salvo in a long re-election campaign by Fine Gael and Labour," and it assumes that more than €600m will be available for tax concessions in each of the next three years."
The report says that the tax plan, which will be pitched as a mechanism to support the creation of 20,000 jobs, will follow a template set down in October’s budget. "In that budget...Noonan directed tax concessions at 'squeezed middle' workers earning between €32,800 and €70,000 with cuts centred on the universal social charge and the higher income tax rate." He also raised the threshold at which people enter the marginal rate.
To put limits on public pay demands, it is reported that spending and tax cuts will be set on a 50/50 basis while gross domestic product is forecast to expand 4% in 2015. Employment is projected to reach the peak achieved before the crash in 2018 and a new high in 2019. See here on the shaky assumptions for this forecast:
Jobs peaked in Q2 2008 at 2.1473m and were at 1.9389m in December. Ignoring the mix of jobs, public schemes and underemployment, to return to Q2 2008 levels would require 208,0000 jobs to be added in 2015-2018 — 52,000 each year.
"In the next couple of weeks, the Government, after consultation with the banks, will be putting additional options on the table to deal with the residue of the most difficult cases, which haven't been resolved already," Noonan said in Limerick Monday on mortgage arrears and variable rates, according to The Irish Independent.
He added: "I have had consultations with the governor of the Central Bank, and he has done a piece of analysis to show the margin, between the cost of money and what they are getting for money when they lend it for mortgages, and he has that for me in the next 10 days or so.
"I'm calling in then, the senior management of the six major lenders in the market in Ireland, and I'll present them with the evidence from the Central Bank, and I'll say to them I think they should reduce their interest rates and that we want to discuss it, and I'll want them to explain why they can't, but we'd prefer it if they did.
"If you call that pressure, that's pressure, but I would see that as a discussion (with the banks) in the normal way. But I don't have legal authority to direct (the banks)," he added.
Proceedings begin at 1400 in Dáil Éireann today.
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