Report warns Government must stick with efforts to reduce national debt

The Irish Fiscal Advisory Council has said the recovery so far has been "impressive"

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Pictured (LtoR) Chief Economist and Head of Secretariat at the Irish Fiscal Advisory Council Dr Thomas Conefrey, Chairman of the Irish Fiscal Advisory Council John McHale and Mr Michael G Tutty. Image: RollingNews.ie

The Government has been told it must stick with efforts to reduce the national debt.

The latest report from the Irish Fiscal Advisory Council says the recovery so far has been "impressive".

But the group - which advises the government on economic policy - says spending increases need to be kept in check.

It is concerned that the Programme for Government does not outline how all of the proposals will be paid for.

The Council says: "Provided the economy is growing at a sustainable rate, it would likely be appropriate for the Government to use the available fiscal space under the rules from 2017.

"However, should signs of overheating emerge, the Government may need to go beyond the formal implementation of the fiscal rules by using unexpected revenue surges to run larger budget surpluses, possibly supported by the establishment of a Rainy Day Fund. This is important in the context of volatile corporation tax revenue and could give the Government scope to use fiscal policy to boost the economy during future downturns".

Professor John McHale is chair of the Fiscal Advisory Council.

He explained that "there were a lot of uncosted plans in the programme, and we await the reconciliation of those plans with an estimate of the fiscal space that is available under the fiscal rules".