Cowen says overspending could threaten economy

During a debate on the Estimates the Minister for Finance warned against overspending.

Mr Cowen said an expenditure spree in buoyant economic circumstances would overheat the economy and lead to inflationary pressures and excessive wage demands. These would seriously damage the Republic's international competitiveness.

"Throwing money at problems will not resolve them either in the short term or on a sustainable basis," said Mr Cowen. "Targeted resources and reform in service delivery, with everyone working for shared objectives and placing a quality service to our citizens at the centre of our concerns, is the best guarantee of an improvement for all."

Mr Cowen saidthat, while the world economic outlook was improving, and economic upturn was being experienced, there would be no return to the very high growth rates seen in the period up to 2001.

"The consensus among most commentators is that economic growth in 2004 will be about 5 per cent. This is a continuation of last year's positive trend," he said.

"There are, however, a number of risks to our economic performance next year. These include oil prices, the dollar and a possible weakening of the US economy."

However, despite the risks, the economic prospects for next year and beyond were fairly positive.