Sunday 4 December 2016

Fine Gael and Labour giving hostages to fortune

Published 11/02/2011 | 05:00

ALMOST no major forecaster managed to predict either the scale of the boom or the terrible contraction that followed.

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This is not because they are stupid. It is because the Irish economy is so small and dependent on what happens overseas that predicting growth is almost impossible.

Changes in oil prices, or political upheavals caused by unpredictable events such as the attacks on the Twin Towers, can have a bigger effect on Irish growth than the economies where the events happen.

It is this fact of life that makes all the manifestoes and economic plans so unconvincing. There is never a Plan B. Our major economic think tanks, such as the Economic and Social Research Institute, are beginning to do this with high-growth and low-growth forecasts, but the political parties are content to stick to unrealistic projections that allow them to make easy choices on paper -- but will not spare them difficult choices in the years ahead.

Fianna Fail and the Greens, burnt by the last few years of gut-wrenching decline, acknowledge this, but the main opposition parties, to say nothing of Sinn Fein's fairy tales, are still content to peddle the easy promises that were a characteristic of all the parties in 2007.

Fine Gael and Labour initially appear to agree on nothing, but leave room for negotiation on most things, from when to cut the deficit to income tax.

The one area where there is real disagreement is in spending cuts. Here Fine Gael wants to make 73pc of all savings from spending cuts, compared with Labour's 50pc, but both parties cling to the nonsense that this can come from social welfare fraud and the like.

Sinn Fein's manifesto calls for spending on almost every side, but only offers the vaguest of explanations for where the money will come from, bar more and more taxes on the rich.

Against this low bar, Labour and Fine Gael look reasonable and responsible, but why they felt the need to give so many hostages to fortune remains a mystery.

Perhaps the parties underestimate the weakness of Fianna Fail or the strength of Sinn Fein.

Either way, their policies are close enough for a coalition agreement, but will be tested severely in the years ahead.

Irish Independent

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