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Wednesday, 5 December, 2001, 17:52 GMT
Ireland warns of slowdown
Charlie McCreevy
Finance minister Charlie McCreevy has less room to manoeuvre
Irish finance minister Charlie McCreevy presented his pre-election budget to parliament, warning that the economy will slow down in the year ahead.

Job losses and poor tax revenues have hampered Mr McCreevy's ability to deliver the pre-election budget voters might have hoped for.

But Mr McCreevy forecast an exchequer surplus of 170 million euros next year - surprising those who expected the government to have to borrow heavily - and promised an extra 425 million euros would be spent on health.

This year's budget was seen as heralding an end to an era of giveaways that characterised the heyday of the Celtic Tiger.

Prime Minister Bertie Ahern
Prime Minister Bertie Ahern will likely face an election next year

Last year's IR 2bn giveaway in tax cuts and welfare measures was so generous as to be deemed inflationary by the European Commission.

Mr McCreevy forecast that growth would slow to 3.9% next year, down from the 6.3% originally forecast.

"I am sure Ireland will emerge from this period of uncertainty stronger," McCreevy told the Irish parliament, stressing his belief that the economy was on a stable footing.

He cited a 610 million euro windfall from the changeover to the euro as one reason for the surplus as well as the use of central bank reserves as reasons for the surplus.

Economists have cautiously welcomed the budget.

"He has done more than expected with less money than expected," Aziz McMahon from Ulster Bank said, pointing to the extra spending on health.

It is quite clearly an election budget, Bloxham Stockbrokers' Alan McQuaid said. "Not resorting to borrowing is a good move and he's found money to pay for national pensions."

See also:

07 Nov 01 | Country profiles
Country profile: Ireland
12 Feb 01 | Business
Ireland's economic row
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