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The last of the ‘tough’ budgets? December 17, 2013

Posted by WorldbyStorm in Economy, Irish Politics.

Those of us who read the front page article on the SBP (and the Sunday Independent) this weekend will have been treated to the proposition that ‘One more tough budget left, then austerity ends’. And the text was unequivocal.

Another tough budget will be needed to fix the public finances – but economic growth will then take over to allow EU debt and deficit targets to be reached, according to the government’s post-bailout economic plan.

And it’s all 3% growth rates and stimulating the construction industry and so on and so forth. And very exciting it all sounds.

The phrase ‘optimism in government circles’ over the plan is used. And why not?

And yet, doesn’t that sit oddly with the following from the Irish Times from a mere two and a half months ago or so, when according to one E. Gilmore, who is Tánaiste of this state:

“This [Budget 2014] is the last of the difficult budgets. This achieves about 95 per cent of the total adjustment which is required to meet our targets. We have provided in this budget for a deficit target of 4.8 per cent which gets us much closer to the 3 per cent which is what we have to achieve by 2015.”

That was pretty unequivocal too.

But if correctly quoted, and who could doubt the IT, surely the government should be pessimistic because it’s predictions from October have been set back by another year? And it raises the question, do they mean ‘last’ of the ‘austerity’ budgets in the way most of us would understand the term ‘last’ or in this new definition where what is actually meant – or so it would appear – is that it is the penultimate budget.

So therefore, if they’re saying Budget 2015 is the last of the tough budgets then they really mean Budget 2016. Or is it 2017… or…

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1. CL - December 17, 2013

The economic growth rate is all important. But its not clear what the sources of this growth are going to be, given the fall in investment. Perhaps they will spell it out in the medium term plan.
6% of GNP, approx. is going to pay interest on the debt, and more than half of this is going outside the state.
Post-exit boosterism and confidence-building positive thinking is unlikely to be enough to create the needed investment.
‘Medium term plan’-does anyone have any info on who the culprits are behind this?

2. Jim Monaghan - December 17, 2013

Interesting that both parties have opted for tax cuts if things improve. So the cuts are permanent. Internationally the right have gone for a low tax regime and as a consequence keeping the state small. Interesting that Labour has gone for this.

Gewerkschaftler - December 17, 2013

Interesting that Labour…? I’d say predictable and depressing.

And the same behavior can be observed in nearly every nominally/formerly social democratic party in Europe.

WorldbyStorm - December 17, 2013

Too true Gewerkschaftler.

3. Gewerkschaftler - December 17, 2013

3% growth of what? GDP is utterly meaningless in a State so wedded to corporate tax arbitrage.

3% growth in GNP may have some impact on people’s lives, but that would require investment. Who’s going to provide that? Not the zombie banks, not the voluntarily bankrupted state. The circulation of capital is broken. What’s left is looting.

The next but one budget will always be the last tough one until what remains of social goods have been sold off to enrich the usual suspects.

CMK - December 17, 2013
4. Ceannaire - December 17, 2013

You have to distinguish between the last austerity budget, which is what we had last year, the last last austerity budget, which was this year, and next year’s last last last tough budget.

5. Jonathan - December 17, 2013

‘One more tough budget left, then austerity ends’. In other words, the same drivel we’ve been listening to since 2008: if we do this, we’ll see the benefits next year! Brian Lenihan, four years ago: “We are now on the road to economic recovery … As we begin to emerge from the unrelenting economic gloom of the last 18 months, we need to rediscover our optimism and our self-belief … Our plan is working. We have turned the corner.” http://www.independent.ie/business/budget/news/budget-2010-worst-is-over-we-have-turned-a-corner-26590187.html

WorldbyStorm - December 17, 2013

It’s always next year, as you and Ceannaire say. Great link to show up the shallowness of the orthodox thinking on this.

6. ivorthorne - December 17, 2013
7. Nessa Childers MEP (@NChildersMEP) - December 17, 2013

Once again. We will be overseen by the EDP, the six pack, the two pack, the FCT. The second of which all Labour MEPS voted AGAINST. But their national counterparts are thrilled about. There will be almost no room for undoing any of the damage. Some ppl actually want it that way too. Small Goverment involves the removal of protections and the protection of elites. Darwinian politics.

Bob Smiles - December 17, 2013

Does anyone think Brian Hayes is exactly like Pete Campbell of Mad men ? He has a face I would never get tired of punching

8. Let Them Eat Cake! | An Sionnach Fionn - December 18, 2013

[…] The last of the ‘tough’ budgets? […]

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