Recovering Ireland to slow pace of tax hikes and spending cuts

Tim Wallace
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IRELAND’S government yesterday said it has been given permission to slow the pace of its spending cuts by international lenders.

The state was bailed out after a promise to rescue its banks tipped the government into bankruptcy.

And after years of tough spending cuts the economy is now recovering, improving the state of public finances and earning the government some leeway on future spending cuts.

The government has reached an agreement that means its spending cuts and tax increases now only need to amount to €2.5bn (£2.1bn), not the €3.1bn previously planned.

It came as the International Monetary Fund said Ireland’s economy is adjusting well and regaining competitiveness.

“Unit labour costs have fallen significantly in deficit countries since they began adjustment, with more substantial adjustments in countries such as Greece and Ireland, on the back of both productivity gains (as labour shedding generally exceeded the decline in output) and wage declines,” said the IMF’s World Economic Outlook report.

On top of that, the report found Ireland the only bailed-out nation where output gains are being made.