Irish Finance Minister Michael Noonan admitted that the economy will expand less than he forecast in December's Budget but insisted it remains on track to produce jobs and meet European Union debt targets.
Mr Noonan said gross domestic product will now increase by 1.3 per cent this year instead of the 1.5 per cent forecast in December, as exports slow more than previously expected due to the European slowdown and the end of patents for some blockbuster drugs made here. Despite this downward revision, Mr Noonan still expects unemployment to fall and employment to rise this year.
The finance minister added that bank stress tests will probably happen later this year – a deadline that the banks have been resisting. "The origin of the Irish crisis was the banking collapse so it would be unreasonable to expect a full exit without a last scrutiny", he said.
Mr Noonan said the Government will stick to its budget targets for the year but added that he hopes some financial flexibility may emerge "as the year goes by". He signalled that any extra cash, which could be €1 billion from 2014, will be used to boost capital spending rather than cutting taxes.
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