Noonan warns of tough budget despite upbeat data
CSO figures show Ireland exited recession in second quarter as exports rose and spending picks up
Shoppers in Blanchardstown Shopping Centre in west Dublin. Consumer spending was up 0.7 per cent in the second quarter of this year, new CSO data show. Photograph: Dara Mac Dónaill/The Irish Times
Minister for Finance Michael Noonan has warned next month’s budget will be no easier despite new figures showing Ireland exited recession in the second quarter of this year.
Data from the Central Statistics Office today show gross domestic product rose 0.4 per cent over the three-month period. In the first quarter, GDP fell by 0.6 per cent. The growth in GDP was largely fuelled by a rise in exports and consumer spending.
While welcoming the figures, which will have a crucial bearing on his fiscal calculations, Mr Noonan said Budget 2014 was still going to be very difficult. He is due to deliver the budget on October 15th.
“There’s no reason to be throwing our hats in the air or anything like that,” he told reporters at the Department of Finance today.
“I suppose what comes from the figures is that the economy is out of recession. There’s modest growth, and taking that in association with the employment figures we had from the same time of the year, jobs are being created now at about 650 jobs a week,” he said. “So it’s moving in the right direction. What we have to do now is make sure we secure our exit from the programme so we must stabilise the growth and continue to grow.”
According to the CSO data, consumer spending rose 0.7 per cent on a seasonally adjusted basis, and net exports rose by 4.3 per cent - or more than €1.5 billion - compared with the first quarter of the year. Services exports rose by 3.6 per cent year-on-year in the second quarter.
Capital investment, meanwhile, fell by 3.4 per cent compared with the first three months of the year and Government spending was 1.3 per cent lower.
Year-on-year, GDP was down 1.2 per cent. Gross national product, which strips out the impact of multi-nationals, fell 0.4 per cent on the quarter and 0.1 per cent on the year.
Mr Noonan said the figures provided a solid foundation from which to cast the budget and to develop a fiscal strategy for the return to private market financing next year after the bailout ends.
He said the figures were more or less in line with expectations and said the Department of Finance would publish a revised set of forecasts in mid-October with the Budget to take account of the figures released today.
While Fine Gael is resisting Labour’s push to ease projected budget cuts to €2.5 billion from the €3.1 billion set out in Ireland’s bailout agreement with the troika, Mr Noonan declined to pinpoint the likely rate of retrenchment.
At the same time, he made a point of saying the return to growth meant the budget would be no more difficult than foreseen.