FAC endorses the Government’s budget plans

Professor John McHale, Director of the Whitaker Institute, in his capacity as Chairman of the Fiscal Advisory Council (FAC),  discussed the Council’s measured endorsement of the Government’s budget plans on yesterday’s RTÉ One News programme and other national news programmes.

In a pre-budget statement, the FAC has advised that reducing national debt must remain a top priority. The FAC advises erring on the side of caution by not increasing the size of the budget package beyond the upper limit of €1.5bn, despite extra revenues from a strengthening economy, so as to protect the country from future economic shocks like a slowdown in world trade or a rise in interest rates. The Council welcomed the Government’s new practice of announcing the size of the budget increase in April, well in advance of Budget Day, but warned that the benefits of this new system would be undermined if the Government chose to ignore its own rules and increased the size of the package on Budget day. It also recommended that any changes to tax and welfare rates in the budget should be executed in the context of a medium-term plan that considers impending spending pressures, particularly from the increase in the ageing of the population that will occur in the coming years.