Irish economy expected to grow by 4% this year

"New anchor": Michael Noonan
"New anchor": Michael Noonan

Ireland's economy is expected to grow by 4% this year, the Republic's Finance Minister has said.

The deficit is falling below 3% from next year onwards, according to Michael Noonan, providing a "new anchor" for budgetary policy.

The minister said people had more money in their pockets and the economy was growing at the fastest rate in Europe and the aim was to bolster sensible growth.

He said: "It is designed to ensure that the days of 'If I have it, I will spend it' are over and this new approach will protect the Irish people from the boom and bust of the past."

In 2010 Ireland required a bail-out worth €85 billion from a troika of international financial institutions.

The government gave the Irish banks a blanket guarantee at the height of the 2008 financial crisis to stop them collapsing. It followed a bubble largely created by an over-heated property market.

Austerity imposed after that deal led to slashed public spending, loss of economic sovereignty and many job losses.

Mr Noonan said Ireland would make up to €1.5 billion available for tax reductions and investment in public services in its next budget announcement in October.

"The partners in Government have also agreed that the agreed space will be split 50:50 between tax cuts and expenditure increases and the actual measures will be announced in Budget 2016.

"Current indications are that a similar amount of space will be available in later years, while at the same time ensuring the achievement of a balanced budget before the end of the decade.

"The budgetary strategy we are pursuing will ensure that our debt levels continue to fall and we are well positioned to withstanding any shocks that may occur in Ireland, in Europe or in the global economy."

Ireland bailed out the country's banks with billions of euros rather than risk their collapse.

The minister said the value of the investment in AIB, Bank of Ireland and Permanent TSB continued to rise.

"It is not the State's intention to remain a holder of its banking investments in the long term.

"The exit strategy is about recovery of the full cost of the taxpayer's investment in these institutions and using the proceeds to further reduce the debt."

The sale of a quarter of PTSB concluded yesterday.

Mr Noonan added: I am now confident that all the taxpayers' money invested in AIB, BOI and PTSB will be fully recovered."