Govt promises to resist pre-election spending splurge
The Government has promised not to announce a give-away budget this December ahead of next year's general election.
The vow follows a warning from the Economic and Social Research Institute about the damage that a pre-election spending splurge could do to the economy.
The think-tank says it expects the economy to continue growing for another 18 months before slowing down in 2008 when the effects of SSIA spending wear off and rising interest rates begin to take effect.
It says any splurge in public spending next year could exacerbate this slowdown.
ESRI economist Alan Barrett says the Government should exercise caution next year to give it scope to intervene if necessary the following year.
"If it spends everything in 2007 and has to cut back radically in 2008, when then you're going to get the difficulties in 2008 compounded," he said.
The Labour Party has expressed concern that the warning will be ignored given Fianna Fáil's propensity to create a feel-good factor ahead of elections.
"They have done it before and they will do it again," the party's enterprise spokesman, Ruairi Quinn, said last night. "Bertie Ahern desperately wants to buy the votes of the electorate."
