Thursday 27 April 2017

Colm McCarthy: Austerity yes, but where is reform?

Budgetary tightening without overhaul of the system is not what people voted for, writes Colm McCarthy

A PROGRAMME of budgetary tightening, austerity for short, is inevitable in Ireland into the medium term. This was Irish policy before the EU/IMF rescue and will be the policy if Ireland graduates from the programme on schedule, but also if the Government is unable to avoid a second bailout.



The Government may succeed, as it deserves to do, in persuading European partners to ease the burden of paying off creditors who invested in banks which have gone bust. It may fail in achieving some burden-sharing. The negotiating strategy consists of seeking help, while maintaining that things are going wonderfully well without any, and this may turn out to be too puzzling for our French and German colleagues.

Whatever outcome is in store, the budgetary options are unaffected. Those who think that there exists a strategy which can avoid tight budgets in the years ahead are selling snake-oil: there will be higher taxes and more expenditure cuts in Ireland in any plausible scenario.

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