Dáil Éireann - Volume 653 - 24 April, 2008

Written Answers. - Fiscal Policy.

Deputy Bernard J. Durkan asked the Tánaiste and Minister for Finance the action he [142] proposes to take to stimulate the economy; and if he will make a statement on the matter. [15846/08]

  Deputy Brian Cowen:While there are a number of challenges facing the economy, the fundamentals are still good. For instance, our public finances are sound with one of the lowest levels of debt in the euro area, our markets are flexible allowing us to respond efficiently to adverse developments, we have a dynamic and well educated labour force, we have a pro-business outward looking society and the tax burden on both labour and capital is low.

Budget 2008 was, however, predicated on a slowing economy. In addition a number of domestic and international downside risks were identified at that time. It is now clear that some of these risks have materialised. Bearing this in mind at Budget time, I provided for an increase in current spending of around 9 per cent this year. This is higher than the projected growth in tax revenues and therefore represents a significant stimulus to the economy. I am also giving priority to full implementation of the National Development Plan, and an increase in capital spending of 12 per cent this year has been provided for. In the short term, this will help to absorb some of the slack emerging from the new house building sector; over the medium term this spending will help to boost the productive capacity of the economy.

The Government is also committed to education, training and life-long learning in order to ensure that those losing their jobs can acquire the necessary skills to gain employment in expanding sectors of the economy. Through the social partnership process, the Government is also supporting improvements in competitiveness by promoting sensible wage developments as well as reforming the public sector. We are also committed to maintaining flexibility in our economy and to maintaining a low burden of taxation of capital and labour in order to reward work and enterprise.