ESRI calls for 20% cut in child benefits
Child benefit payments should be cut by a fifth and public sector salaries slashed in December’s budget, a top economic think-tank warned today.
But the Economic and Social Research Institute advised against calls in the McCarthy report for all welfare payments to be cut by 5% to save money.
In its quarterly economic bulletin the ESRI forecast unemployment will peak at almost 15% next year with a gradual turnaround in the economy expected by the end of 2010.
But economist Dr Alan Barrett warned the Government must make €4bn in savings, with the focus on public spending.
“While tax increases will have to form part of the Budget package, the balance of adjustment should be made on current expenditure,” Dr Barrett said.
But he gave a more upbeat prediction on the country’s employment prospects, revising upward its summer forecast which predicted the jobless rate would soar to more than 16% next year.
“Underlying these annual forecasts is a quarterly profile in which we expect growth to return in the latter part of 2010, although at a very modest pace,” he said.
“On employment, we are somewhat more optimistic now than when writing in July.”
Latest official figures reveal the numbers applying for unemployment benefits fell last month for the first time in almost two years, with the rate at 12.6%.
Dr Barrett said the numbers in work would average 1.85 million next year, up from 1.82 million forecast in the ESRI’s summer commentary.
He said the economy would shrink 7.2% this year and 1.1% next year.
The top economist also forecast the general government debt would hit 76% of Gross Domestic Product in 2010.
