BRUSSELS (MNI) – Ireland hopes its four-year plan to strip E15
billion out of the state budget between now and 2014 will create jobs
and boost confidence and consumer spending, its political leaders said
on Wednesday.

The plan – which is the prerequisite to an EU/IMF loan to aid the
debt-ridden country – aims to bring Ireland’s budget deficit to below 3%
of GDP by 2014 from an estimated 32% in 2010, which includes the one-off
cost of rescuing the banking sector. Stripping out the cost of the
banks, the deficit is expected to be 11.9% of GDP this year, still one
of the highest in the Eurozone.

“The reality for this country is that we have to control a
spiraling debt and reduce it…bringing it down to single digit
figures,” Ireland’s Finance Minister Brian Lenihan told reporters at a
news conference after details of the budget were announced. “That will
create confidence in this country,” he added. The news conference was
broadcast live on the internet.

Ireland confirmed on Wednesday that it plans to front load its
planned E15bn fiscal tightening for 2011-14 by doing 40% of the required
adjustment in 2011 alone. Two thirds of the adjustments planned will
come from cuts in public spending and the rest from the revenue side,
the government plan showed.

“We must concentrate over the next four years on consolidating our
position, reducing what we spend,” Ireland’s prime minister Brian Cowen
told reporters at the same news conference.

“Yes, this will ask a lot of all of our people,” he said, but he
added that if the government could show the people of Ireland that the
cuts were being made in as fair a way as possible, then they would
support it.

“The reductions in expenditure are focused on the areas of the
greatest costs,” Lenihan said.

“By providing certainty to consumers [on taxes] this plan will give
them the confidence to spend in this economy,” he added.

The ministers said they hoped they could get Ireland’s unemployment
rate below 10% by 2014. The rate is currently above 14%.

“We are setting out here to create jobs by improving the
environment in which jobs are created,” Cowen said. “And that’s about
keeping down our costs.”

Cowen said he welcomed the offers of support from non-Eurozone
members Sweden and the UK, while Lenihan said UK Chancellor George
Osborne had been particularly supportive in Ireland’s battle to retain
its low corporate tax rate, which some other European countries had
hoped to force higher.

“Our tax system will continue to provide incentives…for
investment in Ireland,” Lenihan said, as he confirmed Ireland’s 12.5%
tax rate would remain unchanged.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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