Irish Budget 2015: The Nevin Institute said in its autumn Economic Observer [pdf] published today that fiscal consolidation should not exceed €800m in next month's budget - - most of the adjustment would come from the already planned introduction of water charges.
The left-leaning think-tank says that measures "should consist mainly of a revenue-based fiscal consolidation, alongside a programme of public investment, and a social emergency fund targeted at the most vulnerable people and communities in Irish society.
"There is no scope for a reduction in the overall level of taxation in Budget 2015," today's report says.
The institute says that public debt levels remain extremely high and by the end of 2013 were equivalent to 123.3% of GDP and to 145.1% of GNP. Meanwhile the public finances recorded a deficit of 5.7% of GDP in 2013 and "we estimate that the public deficit will be close to 3.7% of GDP in 2014. Yet the debt-to-GDP ratio should decline steadily over the next few years supported by growth in nominal GDP and by extremely low interest rates, while there is likely to be a balanced budget by 2018 even under a no-change fiscal stance. While the public finances remain fragile they will continue to improve provided that monetary policy remains supportive and growth returns to the real economy."
On Monday the fiscal advisory council recommended that the pre-planned €2bn adjustment should go-ahead. However, as expected the Government rejected the advice.
IBEC, the business lobby group, has been demanding income tax cuts so that its members will not be under pressure to provide general pay rises.