Ireland unveils austerity package

Ireland has unveiled an austerity package with harsh spending cuts but optimistic assumptions on economic growth, according to the Financial Times.

The government intends to save €15 billion (£13 billion) over four years, or roughly 9% of GDP, with two thirds in spending cuts and a third in new revenues.

The Irish government has already saved €14.6 billion over the last two and a half years.

The country has confirmed it will keep its corporation tax at 12.5%, which was crucial to driving foreign investment. (article continues below)

However, Ireland’s budget predictions assume economic growth of 1.75% next year, 3.25% in 2012, 3% in 2013 and 2.75% in 2014, despite spending cuts.

Economists have been sceptical about the figures given the deleveraging and the headwinds in the Irish economy.

Outside the domestic economy, exports may not produce enough growth to compensate.

The rest of the western world is also deleveraging and the emerging world is tightening economic policy following a period of overheating.