Estimates to show rise in spending of 7%

Underlying Government spending will rise by 7 per cent next year to over €60 billion, estimates to be published next week will…

Underlying Government spending will rise by 7 per cent next year to over €60 billion, estimates to be published next week will show.

Minister for Finance Brian Cowen is expected to underpin his prudent rhetoric of recent weeks with a spending package broadly in line with projected economic growth, said Government sources.

However, Mr Cowen is expected to ignore recent calls for restraint in spending on big infrastructural projects when he unveils the Government's spending estimates for 2007 next Thursday.

According to the source, capital spending will be closer to the level envisaged in the Government's latest multi-annual framework, which is for an average annual spend of just under € 10 billion.

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The Economic and Social Research Institute has called for average capital spending to be set at €8.4 billion over the lifetime of the next National Development plan - which will run from 2007 to 2013 - citing capacity constraints and inflationary risks.

The spending targets to be announced next week will not include additional spending to be announced on budget day which will be spread across social welfare rises, tax cuts and other areas. This could be expected to add around two or three percentage points to the target of 7 per cent growth .

Mr Cowen has said several times recently that the Government was not planning a spending spree in the run-up to the general election due by the middle of next year. Earlier this week Mr Cowen said that he wanted to ensure the Exchequer remained in surplus in order to create room for manoeuvre should the economic outlook worsen.

The source added that spending in 2006 would be "broadly on target, possibly a bit under". Last year's budget targeted an increase in total spending of 13 per cent.