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OECD Economic Surveys: Ireland 2008

image of OECD Economic Surveys: Ireland 2008

This 2008 edition of OECD's periodic survey of the Irish economy finds that it has performed remarkably well over the past decade, propelling per capita income to above the OECD average. Economic fundamentals remain strong, but economic activity is now easing. The survey examines some of the key challenges Ireland now faces including maintaining growth, the housing market slowdown, financial stability, adapting government spending to slower revenue growth, reforming the pension system, and integrating migrants.

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Adapting government spending to lower revenue growth

Softening economic growth and the slowdown in the housing market mark a turning point for fiscal policy. Strong revenue growth in earlier years financed a sustained expansion of government spending and some cuts in tax rates, while still allowing the government to run a substantial fiscal surplus. This left the public finances in a healthy state with net government debt declining to a very low level. But this benign picture is changing as growth slows and tax receipts increase more slowly. Public spending growth needs to slow. The challenge is to improve public services further without large increases in resources. In these circumstances, it will be even more important to get better value from public spending and to accelerate public management reforms.

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