Cowen warns of economic pessimism

Tánaiste Brian Cowen warned against economic pessimism when he was questioned about an increased Exchequer deficit for the first half of 2007.

Fine Gael leader Enda Kenny had asked the Minister for Finance to confirm that the "tax cuts his party promised before the general election will not now take place" given the Exchequer figures published on Tuesday. These "show that the Government has turned last year's surplus of €900 million into a deficit of €1.4 billion".

Mr Cowen said "the commitments made in the Programme for Government stand on the basis of the overall macro-economic stance the Government is taking".

The results were "in line with expectations and profile". "It is important that we should be careful not to overreact to the current easing from the very high levels of activity seen in the past."

Referring to stamp duty figures, he said there had been speculation about it, but "from a very high base last year the figure is up by 5.5 per cent in the first six months of this year, although we had hoped it would increase by 10 per cent".

Mr Kenny said: "In the first half of the year the Government increased the rate of current spending at 2½ times the rate of growth in tax revenue. It is clear that if this pattern continues the figures at the end of the year will be much worse than those forecast by the Government a few months ago."

Bernard Allen (FG) said it was "a rerun of 2002". Jim O'Keeffe (FG) said it was a case of "conning the people again".

Mr Cowen said the Government had "an intention to continue with tax reforms, moderate growth in current spending, increased capital spending and, I hope, continue the unprecedented economic performance seen in the last decade".