Noonan expects economic growth this year

THERE WAS now a broad consensus that the economy would return to growth this year, Minister for Finance Michael Noonan told the Dáil.

His department, he said, had published revised economic forecasts recently which anticipated that the economy would expand by 0.8 per cent this year and 2.5 per cent next year.

“Other institutions such as the IMF, the EU Commission, the Central Bank and the ESRI also anticipate an increase in economic activity in 2011, followed by acceleration in the growth rate next year,” the Minister added.

Mr Noonan said the recovery was being led by developments in the external sector.

Exports had grown by 9.5 per cent last year, the strongest in a decade, and appeared to have continued that impressive trend at the start of this year.

“This would be typical of a small, open economy,” he added.

“The pharmaceuticals, software, financial and business services and food sectors are all performing well.” The Minister stressed the Government had no plans whatsoever to “raid” investment funds or deposit accounts.

“The Government regards it as its top priority to safeguard the security of savings and would not wish to consider any step that would impact negatively upon confidence,” he said.

Mr Noonan was introducing the Finance (No 2) Bill 2011 covering the research and development tax credit, the suspension of the air travel tax, the introduction of a second lower rate of VAT and the introduction of the pension levy.

He was conscious, he said, of the concerns of the pension industry about the impact of the levy to fund the jobs initiative.

“However, the imposition of the levy is for a relatively short period and its purpose is to improve that environment by providing the means to encourage job creation in areas of our economy most likely to deliver that employment quickly,” he said.

His officials, he said, were consulting with the pensions industry and other stakeholders with a view to minimising, where possible, any unnecessary difficulties which the measure might give rise to.