Minister says growth in public spending must be limited

Growth in public spending must be contained within reasonable limits, the Minister for Finance said.

"I use the word `reasonable' deliberately. I am aware that there is a perception in people's minds when the phrase `control of public expenditure' is mentioned, a perception of severe cutbacks in public services and hardship which that entails for ordinary people," Mr McCreevy said.

"However, I can assure the House that this Government's commitment to the controlling of public spending does not and will not result in such cutbacks or hardship for the public."

During a debate on the Estimates, the Minister said it was already clear that next week's Budget was being framed against a background of more than usual international economic uncertainty.

"The IMF and the OECD have reduced their forecasts for economic growth next year. In short, we are facing a significant slowdown in growth in the US and UK, two of our most important trading partners, and greater uncertainty regarding the international economic scene.

"As a small and very open economy, we cannot expect to remain immune from a world economic slowdown. We are likely to see its impact in terms of slower export growth and a slower rate of growth in foreign direct investment into this country.

"Our budgetary planning and our expectations generally must take account of these realities. We cannot prudently base our plans for the future on the assumption that the extraordinary rates of economic growth we have seen in the recent past will go on for ever."

The Fine Gael spokesman on finance, Mr Michael Noonan, said it seemed fairly certain that the Minister's increase in expenditure in the Budget would be bigger than last year's £200 million.

The Labour spokesman on finance, Mr Derek McDowell, said this year there would be an overall surplus of close on £1 billion and a current surplus of more than twice that amount. "We have a real opportunity in this country to create a fairer, more equal, more civilised society."