Government budget policies run risk of overheating the economy according to European Commission

The European Commission says Ireland should not scrap the Universal Social Charge.

The recommendation comes in a report which raises several fears on the state of the economy.

Leo Varadkar wants to alleviate some of the financial burden on lower paid workers by cutting back on the USC.

However Brussels says our existing targets are going 'in the right direction'.

The report given to TDs last night says the Government's budget policies run the risk of overheating the economy.

The Commission warned that if the USC were abolished, very high personal taxes would be needed to make up the revenue.

The report was given to the Oireachtas committee on finance yesterday. it is critical of some recent government decisions, including the help-to-buy scheme.

The report also raises a concern about the abolition of water charges, and the implications for tax returns as a result.

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