Thursday 19 October 2017

Watchdog: Lessons of crash forgotten

Prof John McHale
Prof John McHale
Colm Kelpie

Colm Kelpie

The head of the State's budgetary watchdog has given his support to the Banking Inquiry, saying it serves as a reminder of the mistakes of the past.

John McHale, of the Fiscal Advisory Council, said there are already signs that the lessons of the past few years are being forgotten.

And he signalled that at a time of political pressure on the Government ahead of the next election, the inquiry should serve as a reminder so that we don't repeat the mistakes that led to the economic crash.

"I had thought that we would be inoculated for a couple of generations against making the kind of mistakes that were made. Now I'm not too sure," Mr McHale told a conference organised by the Economic and Social Research Institute.

"Initially I was actually sceptical that the Banking Inquiry would add all that much value. But I actually think that coming now, at a time when there are signs that some of those lessons are being forgotten when it comes to fiscal policy, I think it's a very timely reminder of the mistakes that were made in the past and to make sure that we don't make them again."

Mr McHale, an NUI Galway economics lecturer, has in the past raised concerns about the Government's decision for Budget 2015 to be mildy expansionary, instead of imposing further austerity.

He has previously described the Budget as a "missed opportunity" to further fix the public finances and cut debt.

Budget 2015 was made up of €420m in tax measures and an increase in spending of around €630m, compared with the original plan of more austerity totalling about €2bn.

The Department of Finance estimates that the deficit will be cut to 2.7pc this year - well within a crucial EU target. But the council believes another austerity Budget would have cut the deficit to 1.5pc, and brought the Government accounts close to balance by 2016.

Irish Independent

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