January tax take up 17 per cent

Tax revenues collected by the exchequer last month rose by 17 per cent to €3.66 billion compared with the same month the previous year.

The Department of Finance said the late payment of corporation tax receipts and the full-year impact of the universal social charge were responsible for the change. It described the revenues as broadly on target.

This change is because measures announced in the 2011 budget did not impact on tax revenues last January.

The department said there was a 3 per cent increase in VAT receipts compared with the same month last year and that excise duty also increased, rising 2.7 per cent.

Spending over the month was €3.83 billion, a 2.8 per cent drop compared with last year. The State spent €769 million last month servicing the interest on the national debt, compared with €483 million in 2011.

Earlier, the Central Bank sharply lowered its economic growth forecast for 2012, citing slowing export growth and weak consumer spending.

In its quarterly bulletin the bank says gross domestic product (GDP) will rise by 0.5 per cent this year, and 2.1 per cent in 2013. This is the second time the bank has revised down its forecasts for the Irish economy this year.

In October it forecast a growth rate of 1.8 per cent for the year - which in turn was a downward revision of a July forecast of 2.1 per cent growth made in July.

Gross national product (GNP), a narrower measure of economic activity that excludes multinational firms, will fall by 0.7 per cent this year, and will rise by only 1 per cent in 2013.

That reverses last quarter's expectations that GNP would rise by 0.7 per cent for 2012.

"The slowdown in the external environment has occurred against the background of an intensification of the sovereign debt crisis, the effects of which has now broadened beyond the financial system to the wider economy," the Central Bank said.

It said Ireland's recovery was at risk as growth among its trading partners slowed due to the euro zone debt crisis.

With the domestic economy performing poorly and unlikely to exit recession this year, any recovery in the country has become export growth dependent.

The Central Bank said personal expenditure will fall by 1.5 per cent this year, with consumers squeezed by smaller disposable incomes reducing spending to build up precautionary savings.

On the external side of the economy, exports are forecast to rise 3.9 per cent in 2012, compared with previous estimates of 5.2 per cent.

However, the bank was somewhat optimistic that the country could still achieve its target of narrowing the budget shortfall to 8.6 per cent of GDP.

"On the face of it, the consolidation measures announced in the budget, and the somewhat better starting position for 2012, should allow the targeted reduction of the deficit to 8.6 per cent of GDP to take place, but the pattern of growth will clearly determine developments to a degree,” the bank said.

“While the fiscal out turn cannot be tied too closely to overall economic activity, the external weakness with its knock on effect on domestic growth is a concern, particularly if the external slowdown persists longer than currently projected.”

But there was little optimism in relation to employment, with the Central Bank forecasting the jobless rate will average 14.6 per cent in the year, slightly higher than the 14 per cent previously expected.

“A pick-up in output growth in 2013 may allow for a modest increase in employment of about 0.4 per cent with unemployment easing to about 14.1 per cent,” the bank said.