Thursday 21 September 2017

Health spending needs further cuts after bailout, warns troika

Professor Joseph Stiglitz
Professor Joseph Stiglitz

Colm Kelpie and Ailish O'Hora

THE troika has reiterated its warning that making savings in health spending requires particular attention as the country leaves the bailout.

But it said core services must be protected. The European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) also warned that greater efforts were needed by the banks to find long-term solutions to the mortgage crisis.

And it said that while unemployment was falling, it remained high. It comes as Nobel winning economist Joseph Stiglitz expressed astonishment at the Irish ability to suck up the pain associated with austerity, and claimed we would have a "lost decade".

He said the notion of taking billions out of an economy in austerity budgets, as has happened here, was "totally absurd" and that economists know it doesn't work.

But in a joint statement marking the end of its final bailout review mission, the troika pointed out that the Government expects to shrink the Budget deficit – the gap between how much the State spends and takes in through revenue and taxes – to 4.8pc of the value of the economy next year.

This is ahead of the targets that have been laid down by Europe.

"To reach these goals, Ireland's record of strong Budget implementation needs to continue," said a joint ECB/EC and IMF statement.

It also warned that greater efforts were needed by the banks to find long-term solutions to the mortgage crisis.

On a more positive note, it said growth had been above the EU average since 2011.

The troika said growth prospects for Ireland were strengthening after weakness in the earlier part of the year.

"Strong policy implementation by the Irish authorities and European decisions have improved funding conditions even as domestic challenges and external uncertainties remain," the statement said.

Columbia University Professor Stiglitz, meanwhile, described our ability to deal with the pain without taking to the streets and rioting like our neighbours in southern Europe as akin to religious ideology.

He has never been a fan of austerity and the former chief economist at the World Bank has voiced his views in the past.

"Yes, you will get back to where you were... but it will be a lost decade, at least," he said.

Irish Independent

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