UPDATE 1-Ireland says 2014 deficit aim not final, focus on '10

DUBLIN, Nov 12 (Reuters) - Ireland is focusing on stabilising its budget deficit at 12 percent of gross domestic product next year, regardless of what the EU specifies for the longer term, the finance minister said on Thursday. The European Commission said on Wednesday Ireland would have until 2014, one year more than previously agreed, to bring its deficit down to the EU limit of 3 percent. Finance Minister Brian Lenihan said however the extension was still subject of a debate and was yet to be approved by the council of ministers, reiterating that he was determined to cut spending next year whatever the final deadline would be. "Whether you extend it by one year or leave it as it is -- one or two member states are looking for a two-year extension -- that doesn't absolve us from dealing with the burden we have now," Lenihan told a press conference. Earlier on Thursday, the finance ministry improved its growth forecasts for 2010, noting that the outlook for the economy was improving with consensus pointing to positive growth returning during 2010. Ireland's economy will shrink by 1.5 percent over the whole of next year, the finance ministry's said in its pre-budget outlook, an improved forecast on the 2.9 contraction predicted in April. Without the 4 billion euros of savings mostly from spending cuts planned in the Dec. 9 budget -- which are being fiercely opposed by unions -- the deficit would reach 14 percent of GDP, the ministry said. "We will now have to wait and see what sort of fiscal austerity measures the minister introduces in the budget in December (for) 2010, as the Pre-Budget Outlook gives no clear signal in that regard," Bloxham Chief Economist Alan McQuaid said. "We expect the public-sector wage bill, child benefit and long-term unemployment benefit all to be cut," McQuaid said. "However, the old-age pension is likely to remain untouched." (Reporting by Padraic Halpin and Andras Gergely; Editing by Ron Askew) Keywords: IRELAND ECONOMY/BUDGET ([e-mail]; Reuters Messaging: [e-mail]; [phone]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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