Ireland announces end of austerity with tax cuts, spending increases

Ireland on Tuesday announced the end of budgetary austerity with some tax cuts and spending increases.

Both Irish Finance Minister Michael Noonan and Public Expenditure and Reform Minister Brendan Howlin introduced Budget 2015 to parliament, saying that the government will make the first welfare hikes, income tax reductions and major public recruitment drive since the recession took firm hold in 2009.

The major items include plans to reduce the Universal Social Charge (USC) and the higher rate of income tax, and introduce measures that will lessen the impact of water charges on families.

Howlin said gross current expenditure for 2015 will be just over 50 billion euros (about 63.5 billion U.S. dollars). This figure represents an increase of 429 million euros over the 2014 budget.

The increases will go to "critical areas" such as social protection, health, education, justice and housing, he said.

Health budget will hit 13.1 billion euros in 2015, including 25 million euros for delayed hospital discharges. Education will be allocated 8.3 billion euros, with a budget allowing for the hiring of 1,700 new staff, including 920 teachers.

Howlin said the rate of child benefit will increase by 5 euros per child from January and would go up by a further 5 euros in 2016.

He said 180,000 older people will benefit from a 9 euro weekly increase to the living alone allowance.

All recipients of social welfare payments will receive a Christmas bonus this year of 25 percent of their weekly payment, he added.

Noonan said the government's priority is to keep public finances on a sustainable path to recovery, adding that the government is committed to bringing deficit under 3 percent of GDP by 2015.

"Today we honor that commitment, not just to our European colleagues but to our own future generations. In fact, our deficit target is 2.7 percent," Noonan said.

Ireland was the first eurozone country to complete a bailout program, and has been held up by the European Union as an example of how to successfully implement an economic rescue.

Ireland's gross domestic product (GDP) fell by 0.3 percent in 2013, but it is forecast to grow by 4.5 percent this year and 3.4 percent in 2015, according to the central bank's estimates.

Meanwhile, unemployment has fallen from a crisis peak of 16 percent to 12 percent, and is forecast to fall to 10 percent next year. (1 euro = 1.27 U.S. dollars)