Market comment - Stability Programme Update puts off difficult questions

Davy Research
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Yesterday’s Stability Programme Update (SPU) projections were for Irish GDP to grow 4.5% in 2021 and 5% in 2022, with the deficit falling from 4.7% of GDP this year to 0.7% by 2024. However, this rosy view rests on conservative expenditure assumptions, which may not be consistent with demographic pressures or spending commitments. There was no indication of how the €5.4bn of unfunded increases in core spending announced in last year’s Budget will eventually be paid for. So next October’s Budget for 2022 may still require measures to consolidate the public finances.