DUBLIN : Ireland is set to ease austerity in its 2014 budget to be unveiled on Tuesday, attempting to give hard-pressed voters a break as it gets ready to end its dependence on an international bail-out later this year. Dublin is using savings from a deal on its bank debt in order to impose fewer cuts than originally planned on a population of 4.6 million that is weary of six years of tax increases, spending cuts, high unemployment and hefty debts. Having consistently hit targets to rebalance its economy, Ireland is confident it will be the first of the euro’s debt-laden countries to complete a three-year European Union/IMF bail-out programme in December.

That will allow the centre-right-led coalition government to show it is regaining economic sovereignty and Brussels to claim its austerity policies are bearing fruit.

“We want to position the country to exit the bail-out so that we can put this phase of Irish history behind us and build the economy and build the country going forward for everybody’s future,” Finance Minister Michael Noonan told journalists on his way into parliament ahead of his budget statement at 1330 GMT.

By making smaller cuts, Noonan is going against advice from his own central bank and initial misgivings from the EU and IMF. But given that Ireland has hit all its targets, it is unlikely to complicate completion of the 85 billion euro bail-out.

Deep discontent remains in Ireland, which was scarred by poverty and emigration before a boom fuelled by easy credit, construction and low taxes helped make it one of Europe’s richer nations.

When the bubble burst in 2008, Ireland had to rescue its banks and the state sank deep into debt, forcing it to seek the bail-out from the EU and IMF in 2010. This will be the seventh austerity budget in six years and the popularity of Prime Minister Enda Kenny’s government is waning.

Outside parliament, a handful of protesters waited for politicians to arrive, waving placards saying “Austerity kills” and “The Enda is Nigh”, referring to the prime minister.

“They’re killing us,” said community centre manager Tommy Coombes. “They need to think twice before continuing with this austerity.”


Noonan has already revealed a lot of the economic forecasts that the budget will be based on, saying the adjustment will be 2.5 billion euros, substantially less than the 3.1 billion originally agreed.

The measures would mean that Ireland will have made 95 per cent of the 33 billion euros in spending cuts and tax hikes needed to bring its deficit down to the EU limit of 3 per cent, Goodbody Stockbrokers estimated.

Noonan expects economic growth to accelerate to 1.8 per cent in 2014 from 0.2 per cent this year, which will help to bring the budget gap down to a targeted 4.8 per cent of gross domestic product, below a 5.1 per cent target agreed with lenders.

Noonan, whose budget plans will again focus more on spending cuts than tax hikes, forecasts a 7.3 per cent deficit this year, still one of the highest in the EU, and aims to deliver a small primary budget surplus in 2014.

He is expected to reverse a cut in sales tax for the hospitality sector and increase capital gains tax. Newspaper front pages speculated about a cut in number of pensioners entitled to free medical care and the scrapping of a free telephone allowance for older people.

Bookmaker Paddy Power gives odds of 6/1 on “recovery” being the first of the austerity era’s buzzwords to be wheeled out in Noonan’s speech, followed by “euro zone” and “bail-out” at 7/1. “Sacrifice” was at 12/1 and “persevere” at 20/1.

“Recent budgets haven’t been associated with good news but a free tin of biscuits for Christmas would certainly brighten up an otherwise dreary Tuesday,” the betting firm said.