EU Commission and Council recommend that Ireland invest in capital expenditure

May 25, 2016

The European Commission Country Specific Recommendations released last week highlight a worrying risk of critical under investment in Ireland’s economy.

Speaking last week on the recommendations, Ian Talbot, Chief Executive Chambers Ireland said, “Ireland has a growing population and an expanding economy, and needs significant capital investment to support this growth. The recommendations highlight a risk of a structural shift in the profile of Government expenditure, with much needed capital expenditure and investment being sacrificed for current expenditure. By necessity the Government was forced to reduce capital expenditure significantly during the crisis but we must now reverse this pattern as a matter of urgency and prioritise capital investment or we will jeopardise future growth prospects.

“Government must critically review their expenditure priorities and ensure that badly needed capital programmes in the areas of housing, transport, and water infrastructure are prioritised to ensure Ireland’s growth can continue.”

The Eu Council in it’s report, issued on 18th May 2016,recommended as follows =

HEREBY RECOMMENDS that Ireland take action in 2016 and 2017 to:

1. Following the correction of the excessive deficit, achieve an annual fiscal adjustment of 0.6 % of GDP towards the medium-term budgetary objective in 2016 and in 2017. Use windfall gains from strong economic and financial conditions, as well as from asset sales, to accelerate debt reduction. Reduce vulnerability to economic fluctuations and shocks, inter alia by broadening the tax base. Enhance the quality of expenditure, particularly by increasing cost-effectiveness of healthcare and by prioritising government capital expenditure in R&D and in public infrastructure, in particular transport, water services and housing.

2. Expand and accelerate the implementation of activation policies to increase the work intensity of households and address the poverty risk of children. Pursue measures to incentivise employment by tapering the withdrawal of benefits and supplementary payments. Improve the provision of quality, affordable full-time childcare.

3. Finalise durable restructuring solutions to lower non-performing loans, to ensure debt sustainability of households and to encourage lenders to reduce the debt of excessively leveraged yet viable businesses. Accelerate the phasing-in of a fully operational central credit registry covering all categories of lenders and debtors.


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