Tax receipts:Thanks to the exceptionally healthy state of the Exchequer coffers, the Government will run a substantial surplus at the end of 2006.
A budget surplus of 2.3 per cent of gross domestic product (GDP) is expected for 2006. This compares to a projected deficit of 0.6 per cent as announced in last year's budget. The improvement is due largely to significant increases in tax receipts, particularly in the areas of stamp duty and capital taxes.
Despite the boost to public spending announced in yesterday's Budget, a general Government surplus of 1.2 per cent has been planned for 2007.
"In the event of a global slowdown, we will be able to use some of this flexibility generated during the good times to protect jobs and public services at home," Minister for Finance Brian Cowen said.
He delivered his third Budget yesterday against a historically strong economic background. "The public finances have never been in better shape," he said.
Gross national product (GNP) growth for 2006 is estimated to end the year at 5.7 per cent, and the Minister predicted that the economy would grow by 5.25 per cent in 2007. "In 2007, our economy will extend its record of outstanding economic progress," he predicted.
Mr Cowen also announced that the Government aimed to achieve a gross debt to GDP ratio of under 25 per cent next year, a level that would make it one of the least indebted states in Europe. The Minister also highlighted the strong employment growth recorded this year.
Total employment is expected to have risen by 87,000 by the end of the year, representing a 4.4 per cent increase. The unemployment rate is also set to average 4.4 per cent, but this compares to an EU average of 8 per cent.
The Minister expects that 72,000 new jobs will be added to the workforce next year, representing a 3.5 per cent increase in employment. Unemployment is expected to remain at current levels.
The 2006 rate of inflation, as measured by the Consumer Price Index (CPI), has exceeded forecasts for this year at 4 per cent compared to 2.5 per cent in the previous year. The Department of Finance has attributed this acceleration to higher mortgage interest repayments and rising oil prices in the first half of the year.
CPI inflation is expected to inch up slightly to 4.1 per cent in 2007.
Mr Cowen noted yesterday that a number of threats to the Government's budgetary projections did exist, for example a "sharper than expected" economic downturn in the US.
Additional risks included a slower than expected rate of growth in Europe and further increases in European Central Bank interest rates. Added to this is the volatility of oil prices and unpredictable fluctuations on exchange rates.
"There are also domestic risks of losing competitiveness and from unbalanced economic growth," the Minister continued. "This Budget addresses those risks by taking a long-term, sustainable approach to our economic approach."