22 May 2012

Doubt over Budget surplus target

8:16 am on 22 May 2012

The Institute of Economic Research expects the Goverment will stick to its surplus target in this Thursday's Budget, but says the worsening outlook for the world economy means it is unlikely to be achieved.

The Government announced the 2014-15 target in last year's Budget and has retained it despite cutbacks in Treasury's growth and revenue forecasts.

NZIER chief executive Jean-Pierre de Raad says it is not vital for the Government to stick to the target.

He says foreign lenders will not desert New Zealand if it misses the target by a year, as long as it shows a commitment to reduce debt over the longer term.

The Council of Trade Unions says the Government would be risking a recession by cutting spending further to achieve the surplus.