Vol. 408 No. 8
16 Mr. Gilmore asked the Minister for Finance if he will outline the likely implications for this year's Exchequer borrowing requirement of the official tax and spending figures for the first quarter; and if he will make a statement on the matter.
I would refer the Deputy to my press statement which accompanied the release of the end-quarter Exchequer returns on 3 April last. As pointed out in the statement, the annual pattern of Exchequer issues and receipts normally gives rise to a high first-quarter deficit — a position which typically adjusts later in the year. For example, the current deficit for the first three months of 1990 was more than double the eventual outturn for the year.
Revenues in the first quarter were sluggish, but, as I indicated in my statement, this can largely be put down to factors which were foreseen at budget-time, notably the effect of the income tax and VAT reductions introduced in the 1990 budget. The weakness of car sales, to which uncertainties associated with the crisis in the Gulf may have contributed, depressed consumption taxes, and pay increases due under the PESP were not, in the main, reflected in the first quarter income tax figures. The prospective improvement in economic trends later in the year, taken together with the effects of the 1991 budget and of the PESP pay increases, should all act to improve buoyancy, and I expect the tax revenue figures to improve significantly as the year progresses.
Both non-capital supply services and Exchequer borrowing for capital purposes in the first quarter are in line with expectations. So far as the first-quarter returns are concerned, therefore, there is no undue cause for concern at this stage, but I can assure the Deputy that the Government will be monitoring trends very closely over the remainder of the year.
Is the Minister still confident that the target of £460 million Exchequer borrowing requirement set in the budget still obtains particularly in view of the fall in tax revenue to which he has referred, the changes in the budget in relation to income tax which came on stream in April and the increase in unemployment which will add to the expenditure side?
It is true that the picture is improving and at the end of April it showed an improvement over the position at the end of the first quarter. I am aware of the additional expenditure that will be required for the extra unemployment figures. There is some improvement on the tax side but, as I said some time ago — and I repeat it — we need the second quarter returns before we can definitively make up our minds as to whether the trends will give us the outturn we expect. Everybody knew there was a slow first quarter and everybody knew everything was slowing down in the last quarter of last year. It is a question of waiting to see trends for recovery. The recovery projected in the budget, based on a 2.25 per cent growth rate, was based on a recovery in the second half of the year, not in the first half. I know many commentators said it was impossible and it will not be achieved and yet two reports issued yesterday come very close to our projections in relation to growth. Until I have had the second quarter figures I will not be able to determine a trend and I would be very foolish to say otherwise at this stage.
The Minister has referred to commentators expecting that the target will be overshot. Can he rule out the possibility of a mini budget, which some of those commentators have referred to? Can he give an assurance to the House that there will not be a mini budget?
This is a very specific matter worthy of a separate question.
It is related.
It is totally different.
Put down a question, Deputy; it is a very specific matter.
(Limerick East): The Minister mentioned in his reply that he expects average unemployment for the year to exceed what he estimated on budget day and I should like to know what his Department's estimate is now for average unemployment for the year.
That is a separate figure, but it will certainly be well in advance of projections. If I had another month's figures I would be able to judge better but the figure will be about £30 million or £35 million in additional expenditure.
