Saturday 21 October 2017

€5bn cuts needed in Budget says Sutherland

Donal O'Donovan

Donal O'Donovan

Peter Sutherland last night said deficit cuts of up to €5bn are needed to prevent the EU or IMF taking control of the economy. "This is a moment of truth for the country. We need a clear sense of leadership of where we are going," he said.

The former EU commissioner called on the government and opposition parties to go well beyond the €3bn deficit reduction previously set for the Budget 2011.

"Economic and fiscal conditions mean tightening in the range of €4bn to €5bn should be implemented.

"The co-operation promised by the government to the opposition for the analysis of the facts and options is of great importance and time is of the essence," he told the annual dinner of the Dublin Chamber of Commerce last night.

Mr Sutherland said that with an election now looming: "The opposition have as important a role to play as the government in the months ahead."

Hobsons' choice

Failure to address the issues facing the country will leave Ireland with a Hobson's Choice between borrowing in the markets at "punitive and unsustainable rates" or going to the EU and IMF, he said.

To avoid those fates, Mr Sutherland called on politicians an all sides to deliver clarity on their commitment for a four-year budgetary plan. He said this needed to happen within weeks.

Mr Sutherland dismissed arguments that deep cuts and tax increases will stifle economic recovery.

The former EU Commissioner said Irish experience of the 1980s showed a return to growth only happened after cuts were made and long-term confidence was restored.

He said the current crisis had shown a return to stability after last year's radical budget after the economy had shrank by 12pc over the previous two years.

Despite calling for cuts, Mr Sutherland said he wanted to strike a positive note. He said growth in the economy is being held back by "the sense of fatalism and even depression evident everywhere in Ireland today".

The former RBS director and current chairman of Goldman Sachs International acknowledged that the financial services sector wrought terrible destruction in Ireland. But he said: "The recurring budget deficit and its reduction is the real issue now."

He told his audience that: "Re-balancing the books can give the private sector the confidence to start spending again (as well as reducing the cost of borrowing).

"State services have been profligate in spending and grossly inadequate in performance," he said.

He reiterated previous calls to reduce costs, he called for benchmarking of public sector pay against rates abroad and also for a sell-off of state assets including the ESB.

Irish Independent

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