We've been busy ruling out options -- now let's focus on what we can do
The Government must not tie its own hands by making promises on pay, tax and welfare that it cannot keep, writes Colm McCarthy
Published 03/07/2011 | 05:00
IT looks as if the Greek crisis has been kicked to touch for now and there will be no significant short-term implications for Ireland. There could be some long-term opportunities, depending on the way things pan out, and some speculation on this matter is offered later. But we are into July, the Dail and the political/media class will head for the beaches in a few weeks and the crisis will be put on hold until late September.
The current plan appears to be a spending review, to be completed while the politicians are away, leading to a December Budget and more fiscal measures along the lines of the Memorandum of Understanding with the EU/IMF. It is already clear that a critical component of that deal, namely Ireland's re-entry to the bond market on sustainable terms by late 2012 or early 2013, is unlikely. So something's got to give.
There are only two things that can be done to make the Irish fiscal position sustainable without sovereign default, which is to be avoided if at all possible. The first is a sharing of the costs of bailing out those who lent to bust Irish banks, something which is currently seen by our European 'partners' as the exclusive responsibility of a bust Irish Exchequer.