The Minister for Finance, Mr McCreevy, will be in the strongest pre-Budget financial position for many years, as Estimates to be published today will show that spending growth next year will be kept well within the Government guidelines.
The Estimates of spending for 1998, to be published this afternoon, are expected to show a rise in current spending of around 3 per cent. Some sources suggest that the increase may even come in slightly below the 3 per cent figure. The spending total to be announced this afternoon will be added to on Budget day - mainly by increases in social welfare - bringing the overall increase in spending next year to around the 4 per cent limit outlined in the Government's programme.
Once today's Estimates are published, final preparations will commence on the 1998 Budget package, due on December 3rd. The details of the Budget Day announcement have yet to be decided, as the special Cabinet Budget subcommittee has yet to finalise the specific measures.
However, it is expected that around £350 million to £400 million will be given away in tax cuts, with the idea of 2 percentage points off both the higher rate and standard rate tax bands still under discussion and supported by the Progressive Democrats.
In addition, there is likely to be some emphasis on widening the standard rate income tax band and increasing personal tax allowances. A reduction in the standard corporation tax rate is also anticipated.
Significant reductions in PRSI are unlikely, following the cuts in previous budgets. This will also ensure that receipts from PRSI continue to be very buoyant.
Some of the main measures to be announced on Budget Day will include general social welfare increases, as well as a further Christmas bonus to welfare recipients next year, costing around £40 million.
However, the amount of money which will have to be spent to index link benefits is less than in previous years, following the falloff in the live register.
The Estimates today will also reveal significant capital spending on roads and industrial grants. Education will also receive a substantial boost and the new higher education fund unveiled last week will receive £100 million.
So far it is unclear how large a surplus on the overall Budget Mr McCreevy will aim for next year, although market analysts are predicting a level around £100 million. This will be the result of £1.1 billion surplus on the day-today running of the economy to be offset by capital borrowing of £1 billion.
